FEDERAL COURT OF AUSTRALIA

Minister of State for Employment Workplace Relations and Small Business v CPSU, Community and Public Sector Union [2001] FCA 316

INDUSTRIAL LAW – award prescribing salaries and conditions of employment for employees of the former Commonwealth Employment Service (“CES”) under Public Service Act 1922 – formation of companies controlled by Commonwealth to engage in competitive tendering for provision of services previously supplied by CES - whether activities of new companies a “business” for purposes of Workplace Relations Act 1996 – whether new companies government authorities or agencies – whether new companies successors, assignees or transmittees from CES – whether awards and agreement formerly binding on CES binding on new companies - one company a wholly-owned subsidiary of the other and providing employees and other services for parent - whether subsidiary bound by awards formerly binding on CES - declaratory relief - utility of general declaration when extent to which party bound by award will depend on application of award on its proper construction to detailed findings of fact.

Workplace Relations Act 1996 ss 149, 170MB

Re-Establishment and Employment Act 1945 ss 47, 48

Employment Services Act 1994

Public Service Act 1922 s 81C

Commonwealth Services Delivery Agency Act 1997 (Cth)

Industrial Relations Act 1988 (Act No 86 of 1988) s 149

Conciliation and Arbitration Act 1904 s 61

Corporations Law

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564

Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (Industrial Relations Court of Australia, 31 October 1995, unreported) cited

Australian Rail Tram & Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683 followed

Barratt v Howard (2000) 96 FCR 428 followed

Bransgrove v Ward and Syred (1931) AR 272 not applied

CEEEIPPAU v Telstra Corporation Ltd (1998) 85 IR 318 followed

Clyne v Federal Commissioner of Taxation (1980) 49 FCR 25 followed

Community & Public Sector Union v Stellar Call Centres Pty Ltd (1999) 92 IR 224 cited

Crosilla v Challenge Property Services (1982) 2 IR 448 cited

Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSWConvR 55-589 followed

Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219 followed

Employment National Ltd v CPSU, The Community and Public Sector Union (2000) 173 ALR 201 cited

Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 67 IR 347 cited

George Hudson Ltd v Australian Timber Workers Union (1923) 32 CLR 413 distinguished

Hillman v The Commonwealth (1924) CLR 260 distinguished

Jenkins v NZI Securities Australia Ltd (1994) 124 ALR 605 followed

Kawasaki Steel Corporation v Owners (etc) of “Daeyang Honey” (1993) 120 ALR 109 followed

Meat & Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 cited

Messier-Dowty Ltd v Sabena SA (No. 2) [2001] 1 All ER 275 followed

Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 followed

North Western Health Care Network v Health Services Union of Australia (1999) 164 ALR 147 cited

North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477 cited

PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 followed

R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297 cited

Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 distinguished

Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533 followed

State Bank of New South Wales v Commonwealth Savings Bank of Australia (1986) 161 CLR 639 cited

Stellar Call Centres Pty Ltd v CEPU [2001] FCA 106 cited

MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS V CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION, EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED

NO. N 429 of 2000

AND

EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED V CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION AND MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS

NO. N 432 OF 2000

JUDGES: BEAUMONT ACJ, RYAN & MADGWICK JJ

DATE: 15 JUNE 2001

PLACE: SYDNEY

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  The appeal be allowed in part.

2.                  The order made by Einfeld J on 11 April 2000 be varied:

(a)                by adding to the declaration made in the proceedings numbered NG181 of 1998, the words: “to the extent that each such award or agreement (as the case may be) was capable, according to its terms, of applying to the applicants or either of them on or after that date”;

(b)               by adding to the declaration made in the proceedings numbered NG 331 of 1998 the words: “to the extent that each such award or agreement (as the case may be) was capable, according to its terms, of applying to the first respondents or either of them on or after that date”;

(c) by adding to the declaration made in the proceedings numbered NG 402 of 1998 the words “to the extent that each of such award or agreement (as the case may be) was capable, according to its terms, of applying to the first and second respondents or either of them on or after that date”.

3. The appeal be otherwise dismissed.

.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

BEAUMONT ACJ:

INTRODUCTION..................................................................................................................... 3

(1) NG 181 of 1998......................................................................................................... 3

(2) NG 331 of 1998......................................................................................................... 3

(2) NG 402 of 1998......................................................................................................... 3

EN AND ENA’S CLAIM FOR A NEGATIVE DECLARATION............................................. 4

CPSU’S DEFENCE................................................................................................................... 7

THE PROVISIONS OF THE AUSTRALIAN PUBLIC SERVICE, GENERAL EMPLOYMENT CONDITIONS AWARD 1995 [a 1660].................................................................................. 10

THE AGREEMENT................................................................................................................. 10

THE PRINCIPAL AGREEMENT BETWEEN EN AND THE COMMONWEALTH (DEETYA) DATED 26 FEBRUARY 1998............................................................................................................... 12

EN’S CORPORATE STRUCTURE......................................................................................... 13

THE COURSE OF AUTHORITY IN THE HIGH COURT AND THE FEDERAL COURT, DEALING WITH THE MEANING AND OPERATION OF S 149 AND ITS PRECURSORS................ 14

George Hudson Limited v Australian Timber Workers’ Union (1923) 32 CLR 413....... 14

Hillman v The Commonwealth (1924) 35 CLR 260........................................................ 15

Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533................................ 17

Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation [“ATOF”](1990) 171 CLR 216....................................................................................... 18

North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477......................................................................................................................................... 21

Australian Rail Tram and Bus Industry Union v Torrens Transit Services [2000] FCA 1683 (Mansfield J, 21 November 2000)..................................................................................... 25

PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 (Full High Court)......................................................................................................................................... 28

Stellar Call Centres Pty Ltd v CEPU (2000) FCA 106 (Full Federal Court)................... 30

THE REASONS FOR JUDGMENT AT FIRST INSTANCE.................................................. 30

(a) Introduction and background facts............................................................................. 30

(b) Did the activities of the departmental entitles constitute a “business” for the purposes of s 149(1)(d)? 34

(c) Was there a transmission of the business?................................................................... 35

(i) The test..................................................................................................................... 35

(ii) The evidence............................................................................................................. 36

(iii) Application of the test to the evidence........................................................................ 39

(d) The “parties bound” clause and the PS Act................................................................. 42

(e) The Public Service..................................................................................................... 43

DECLARATORY ORDER MADE AT FIRST INSTANCE.................................................... 43

EN’S AND ENA’S GROUNDS OF APPEAL......................................................................... 44

THE MINISTER’S GROUNDS OF APPEAL......................................................................... 44

CONCLUSIONS ON THE APPEAL...................................................................................... 45

(a) The material provisions of the PS Act......................................................................... 45

(b) Analysis of the course of High Court authority on s 149 and its precursors and its significance for present purposes............................................................................................................... 49

(c) The results of the appeals........................................................................................... 53

ORDERS PROPOSED............................................................................................................. 54

INTRODUCTION

1                     There are two appeals before the Full Court from declaratory orders made by a single Judge of the Court (Einfeld J) in three proceedings heard together as follows:

(1)               NG 181 of 1998

2                     An application brought by Employment National Limited (“EN”) and Employment National (Administration) Pty Limited (“ENA”) (the appellants in N 432 of 2000) against the CPSU, Community and Public Sector Union (“CPSU”) (the first respondent in N 429 of 2000 and N 432 of 2000) in which EN and ENA sought declarations that certain Public Service awards and a particular Department of Employment, Education, Training and Youth Affairs (“DEETYA”) Certified Agreement (“the Agreement”) were not binding on either of them.

(2) NG 331 of 1998

3                     An application brought by the Minister of State for Employment Workplace Relations and Small Business (“the Minister”) (the appellant in N 429 of 2000 and the second respondent in N 432 of 2000) against EN and ENA and CPSU in which the Minister sought declarations that the awards bind and apply to employers only in respect of employees employed under the Public Service Act 1922 (Cth) (“the PS Act”).

(2)               NG 402 of 1998

4                     An application brought by CPSU against EN and ENA in which CPSU sought declarations that the awards and the Agreement were binding on EN and ENA.

5                     Einfeld J made declarations that the awards and the Agreement were so binding. EN, ENA and the Minister now appeal from those orders.

6                     In order to understand the issues on the appeals, it will first be necessary to explain the nature of the claim sought to be made by EN and ENA at first instance, and CPSU’s defence to that claim, and the relevant statutory context, and the main instruments involved in the dispute.

EN AND ENA’S CLAIM FOR A NEGATIVE DECLARATION

7                     By their amended statement of claim dated 3 September 1998, EN and ENA made the following claims:

·                    EN and ENA were companies incorporated under the Corporations Law.

·                    CPSU was an organisation of employees registered under the Workplace Relations Act 1996 (Cth) (“the WR Act”).

·                    EN employed one person, its managing director.

·                    ENA employed more than 1,000 persons.

·                    Neither EN nor ENA employed, or intended to employ, any person under the PS Act.

·                    EN was formed with the object of providing employment services.

·                    ENA, a wholly owned subsidiary of EN, was formed and on 20 October 1997 contracted to provide administration and other services necessary to enable EN to operate its business.

·                    EN entered into agreement with the Commonwealth (as represented by DEETYA) on 27 November 1997, whereby EN agreed to provide the Department with operational, management and consultancy services during the period 1 December 1997 to 30 April 1998. During this period, ENA provided these services to EN.

·                    EN and the Commonwealth (represented by DEETYA) entered into an agreement on 26 February 1998 whereby EN was to provide certain employment services to the Department. On 1 May 1998, EN commenced to provide those services to the Commonwealth; and ENA commenced to provide services to EN.

·                    CPSU and the Commonwealth were respondents to and bound by the following awards and Agreement:

q                   The Australian Public Service, Administrative Service Officers (Salaries and Specific Conditions) Award 1995

q                   The Australian Public Service (General Employment Conditions) Award 1995

q                   The Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995

q                   The Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995

q                   The Australian Public Service, General Service Officers (Salaries and Specific Conditions) Award 1995

q                   The Australian Public Service, Technical Officers (Salaries and Specific Conditions) Award 1995

q                   The Australian Public Service, Specific Professional Classifications (Salaries and Specific Conditions) Award 1995

q                   The Department of Employment, Education, Training and Youth Affairs Network Certified Agreement 1998

·                    Neither EN nor ENA is a named respondent to any award or certified agreement made under the WR Act.

·                    In relation to the awards and the Agreement, neither EN nor ENA is a successor to, or assignee or transmittee of, any business or part of a business, of the Commonwealth for these reasons:

q                   The Commonwealth did not conduct a business within s 149 of the WR Act (see below for the provisions of s 149(1)(1A)).

q                   The business conducted by EN, or by ENA, is not a business, or part of a business, formerly conducted by the Commonwealth.

q                   The agreement made on 26 February 1998, abovementioned, was due to come to an end on 30 November 1999.

·                    Alternatively, if either EN or ENA is a successor, assignee or transmittee of the business, or part of the business of the Commonwealth, none of the awards nor the Agreement were binding upon either EN or ENA.

·                    Alternatively, if the awards or the Agreement binds EN or ENA, the awards and the Agreement did not apply to either EN or ENA in respect of persons who are not employed by either of them under the PS Act.

8                     (Section 149 provides:

“(1) Subject to any order of the Commission, an award determining an industrial dispute is binding on:

(a) all parties to the industrial dispute who appeared or were represented before the Commission;

(b) all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);

(c) all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;

(d) any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer; [Emphasis added]

(e) all organisations and persons on whom the award is binding as a common rule; and

(f) all members of organisations bound by the award.

(1A) For the purposes of subsection (1), the Australian Capital Territory Government Service is taken to be the successor to the business of the Australian Capital Territory in relation to the transitional staff within the meaning of the ACT Self-Government (Consequential Provisions) Act 1988.” )

9                     (Section 170MB of the WR Act makes similar provision for certified agreements.)

CPSU’S DEFENCE

10                  By its amended defence dated 12 June 1998, CPSU admitted some formal matters, but otherwise contended as follows:

11                  Although (as claimed by EN and ENA) neither EN nor ENA intended to employ any person under the PS Act, the relevant employees were transferred to the employment of ENA by virtue of the certification of the Prime Minister and a declaration of the Public Service Commissioner under s 81C of the PS Act.

12                  (Section 81C of the PS Act provides:

“(1) Where the Prime Minister certifies in writing that a function that has been performed by persons appointed or employed under this Act is to be performed by a Commonwealth authority, the Board may, by declaration in writing published in the ‘Gazette’, declare that specified officers or classes of officers are in the employment of the Commonwealth authority.

(2) An officer specified, or included in a class of officers specified, in declaration under subsection (1):

(a) on the day specified in the declaration for the purpose of this subsection, ceases to be an officer; and

(b) from and including that day, is employed by the Commonwealth authority specified in the declaration.

(2)               For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons.” (Emphasis added)

“Commonwealth authority” is defined to include (amongst others) a company in which (as here) the Commonwealth has a controlling interest (s 7(1)).)

13                  No determination of special terms or conditions of employment under s 81(C)(3) was made.

14                  The Declaration, dated 1 May 1998, was as follows:

“Public Service Act 1922

DECLARATION UNDER SUBSECTION 81c(1)

Whereas on 1 May 1998, John Winston Howard, Prime Minister, pursuant to subsection 81C(1) of the Public Service Act 1922 (the Act) certified that supervisory, administrative, clerical and administrative support functions in support of employment services, that have been performed by persons appointed or employed under the Act in the Department of Employment, Education, Training and Youth Affairs, are to be performed by Employment National (Administration) Pty Ltd, a Commonwealth authority within the meaning of subsection 7(1) of the Act;

NOW therefore, I, Peter William Miller, delegate of the Public Service Commissioner, declare that the officers whose names are listed in the Schedule to this Instrument, are in the employment of Employment National (Administration) Pty Ltd with effect from 1 May 1998.”

15                  The Prime Minister’s certificate was to the effect stated by the Commissioner.

·                    The objects for which EN was formed were set out in its Memorandum of Association in these terms:

“(a) to provide employment services, including but not limited to, the provision of employment assistance to a person that:

(i)                 is based on an assessment of the person’s individual circumstances; and

(ii)               is aimed either at enabling the person to gain employment or at improving the person’s prospect of gaining employment;

(b)                                       to provide such employment services as are identified by the Minister as services to be provided in the public interest, and in respect of which the reasonable costs of which will therefore be met by the Commonwealth …;

(c)                                       to provide assistance to the Secretary to the Department … on terms agreed between the company and the Secretary in relation to the Commonwealth … and Employment Assistance Australia;

(d)                                       to perform any function conferred upon it by Commonwealth legislation;

(e)                                       to [provide] services by way of:

(i)                 matching with employers who are seeking staff, persons who are seeking employment;

(ii)               counselling, training and mentoring or other relevant services to enhance the capacity of persons to gain employment;

[f] to perform any function which relates to the above objects and which will enhance its commercial viability, and its capacity to meet its other objectives.

In this memorandum of Association, ‘employment services’ means unemployment benefits (within the meaning of paragraph 51(xxiiiA) of the Constitution of the Commonwealth) and ‘Minister’ means the Minister for the Commonwealth for the time being responsible for Employment Education Training and Youth Affairs.”

·                    In practical terms, the implementation of the agreements relied upon by EN and ENA involved no substantial change to the identity or functions of existing staff; and the staff who managed the Commonwealth Employment Service (“CES”) pursuant to the agreements were existing CES or DEETYA staff on leave without pay, who were supplied by ENA to EN to perform the functions that they had previously performed directly for DEETYA and CES.

·                    By providing services to the Commonwealth (as represented by DEETYA) pursuant to the agreement dated 26 February 1998, EN became the successor, assignee or transmittee of the business, or part of the business, of the Commonwealth for the purposes of s 149(1)(d) and s 170MB(1) of the WR Act.

·                    By providing the services mentioned to EN, ENA became the successor (etc) for the purposes of s 149(1)(d) and s 170MB(1).

·                    The application of the awards and the Certified Agreement is not limited to persons employed under the PS Act.

THE PROVISIONS OF THE AUSTRALIAN PUBLIC SERVICE, GENERAL EMPLOYMENT CONDITIONS AWARD 1995 [a 1660]

16                  As has been seen, several awards are involved here, including this one. However, for immediate purposes, it will suffice to refer to this award, by way of illustration of some of the questions that now arise.

17                  In this award, the parties bound clause (cl 5) provides (cl 5.1) that it will apply to, and bind, the officers, members and all persons eligible to be members, of a number of unions, including the CPSU.

18                  Clause 5.2 states:

“5.2 Employers

This award will apply and be binding upon all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the [Public Service] Act (1922).”

19                  “Employee” is defined (cl 3.1) so as to include –

“[an] officer and employee whether full or part-time as defined in the [Public Service] Act, excluding those employed under [s] 82AF of [that] Act, unless the contrary intention is specified”.

20                  (Section 82AF, which provides for the employment of overseas employees, is not material for present purposes.)

21                  Clause 6.2 deals with the relationship between the award and the PS Act by providing that “this award will be read in conjunction with the Act …” (cl 6.2.1).

22                  Reference should next be made to the relevant provisions of the Agreement.

THE AGREEMENT

23                  The Preamble to the Agreement, which came into force from 30 March 1998 and was to remain in force until 30 June, 1999, stated:

“Preamble

The Department [DEETYA] is entering into this Agreement with staff to provide certainty in relation to employment conditions and the way their career paths will be handled during a period of significant transition.

This Agreement addresses the particular circumstances of DEETYA staff who, as a consequence of the implementation of the employment services market, are not able to be placed in a position in the Department. It is intended to provide stability in employment conditions while introducing flexibility in the way work is arranged, and it provides for a pay increase and a one-off bonus payment for staff. This Agreement will support the continuing achievement of operational outcomes during the transition and, after the commencement of the market, finalisation of discontinued activities.”

24                  The “Parties Bound” provision, cl 3, provided that the Agreement shall apply and be binding upon the Minister and –

“(b) Non-SES [Senior Executive Service] DEETYA staff who are employed in the Commonwealth Employment Service, Employment Assistance Australia or in Transition Services Units.”

25                  “Staff” were defined (cl 4) to mean people who are –

“… employed under the Public Service Act 1922 who are employed in or who are unattached from and last held office in the Commonwealth Employment Service, Employment Assistance Australia or Transition Services Units”.

26                  The relationship of the Agreement to existing awards, agreements and Acts was dealt with in some detail by cl 5.

27                  For example, with respect to awards, cl 5.2 provided:

“5.2 The parties agree that the APS Salaries Awards as varied from time to time, will be read in conjunction with this Agreement.”

28                  (“APS Salaries Awards” was defined (cl 4) to mean the:

“• Australian Public Service, Administrative Service Officers (Salaries and Specific Conditions) Award 1995;

• Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995; and

• Australian Public Service, Specific Professional Classifications (Salaries and Specific Conditions) Award 1995;”)

29                  With respect to “Acts”, the following (amongst other) provision was made:

“5.8 This Agreement operates in conjunction with the Determinations made under section 82D of the Public Service Act 1922 and prevails to the extent of any inconsistencies.

5.9              It is acknowledged that employment is subject to the provisions of the following Acts (and regulations or instruments made under the Acts) amongst others:

Workplace Relations Act 1996

Long Service Leave (Commonwealth Employees) Act 1976

Maternity Leave (Commonwealth Employees) Act 1973

Superannuation Act 1976

Superannuation Act 1990

Superannuation Productivity Benefit Act 1988

Merit Protection (Australian Government Employees) Act 1984

Safety Rehabilitation and Compensation Act 1988

Occupational Health and Safety (Commonwealth Employment Act 1991

and the Public Service Act 1922 except where it is affected by the terms of this Agreement.

5.10 The Department will consult with staff covered by this Agreement and/or their representatives on any significant implications for matters covered by this Agreement that may arise from changes to the Public Service Act 1922.”

30                  It will be convenient next to refer to the general provisions of the Principal Agreement between the Commonwealth and EN.

THE PRINCIPAL AGREEMENT BETWEEN EN AND THE COMMONWEALTH (DEETYA) DATED 26 FEBRUARY 1998

31                  The Principal Agreement was to be in force from 1 May 1998 until 30 November 1999 (cl 2.1).

32                  EN (“the Provider”) could not assign or sub-contract any of its rights and obligations under the contract without DEETYA prior written permission (cl 3.5; cl 3.6).

33                  No fee was payable to EN for the provision of employment services to an ‘Eligible Job Seeker” where EN may be entitled to a fee for the provision of the same or a similar service” from another public sector funded body” (cl 4.6).

34                  Ownership of all Commonwealth Material remained vested in the Commonwealth (cl 9.1).

35                  EN was to assist DEETYA to monitor and evaluate the provision of services under the contract (cl 11.1).

36                  DEETYA could terminate the contract for breach or other (specified) just cause (cl 15.4).

37                  DEETYA could terminate for any reason by giving at least fourteen days’ notice (cl 15.5).

38                  EN was to notify Centrelink of changes in the circumstances of Eligible Job Seekers (cl 18.1).

39                  EN was to be deemed to be in default under the contact, if without DEETYA’s prior written consent – “Effective Control” of EN was changed (cl 21.2).

40                  The Agreement made provision for EN to supply specific services known as “Flex” 1, 2 and 3 for reward in the form of particular fees. The precise nature of these respective employments is described in the summary of the primary Judge’s reasons given below.

41                  Reference should now be made to aspects of EN’s corporate structure, as described in its Memorandum of Association.

EN’S CORPORATE STRUCTURE

42                  Reference has already been made to the objects clause (cl 3) of EN’s Memorandum of Association.

43                  Mention should also be made of cll 7 and 8 of the Memorandum as follows:

“7 Limits on Commonwealth Power

While the Commonwealth is legally or beneficially entitled to all of the issued shares in the company, the company shall not carry on any business or do any act or thing that would render the holding of those shares in the company beyond the powers of the Commonwealth under the Constitution of the Commonwealth.

8.                  Compliance with the ‘Governance Arrangements for Government Business Enterprises’

While the Commonwealth is legally or beneficially entitled to all of the issued shares in the company, the company shall comply with the ‘Governance Arrangements for Government Business Enterprises’ as revised form time to time.”

44                  The identity of the subscribers and the numbers of shares taken were:

·                    The Minister for DEETYA – 40 shares of $1.00.

·                    The Minister for Finance – 40 shares.

·                    The Secretary and Deputy Secretary, Department of Finance – 5 shares each.

·                    The Deputy Secretary and First Assistant Secretary, DEETYA – 5 shares each.

45                  Before going to his Honour’s reasons, it will be convenient to refer to the course of authority, in the High Court and in this Court, dealing with the meaning and operation of s 149 of the WR Act and its precursors, noting that some of the decisions were made after his Honour’s judgment.

THE COURSE OF AUTHORITY IN THE HIGH COURT AND THE FEDERAL COURT, DEALING WITH THE MEANING AND OPERATION OF S 149 AND ITS PRECURSORS

George Hudson Limited v Australian Timber Workers’ Union (1923) 32 CLR 413

46                  Section 24(1) of the Conciliation & Arbitration Act 1904 (Cth) provided that a certified agreement shall, unless otherwise ordered, have the same effect as between the parties as, and be deemed to be, an award for certain statutory purposes. Subsequently, s 24(1) was amended by inserting after the words “as between the parties” the words “or any successor, or any assignee or transmittee of the business of a party bound by the agreement, including any corporation which has acquired or taken over the business of such party”. It was held by Isaacs, Higgins and Starke JJ that, as so amended, s 24(1) applied to an agreement made, and to a successor (etc.) who has become such, prior to such date.

47                  Isaacs J (with the agreement of Starke J (at 453)) said (at 438):

“In the present instance Parliament has thought it expedient, in order to prevent injustice or even a defect of the scheme of industrial peace intended by the statute, to enact that the employees’ rights shall not be disturbed by the mere fact that the owner of the business happens to be another individual. In this case the only difference, so far as appears, is a mere change in name. It may or may not be substantial. It is ‘George Hudson Limited’ instead of ‘George Hudson and Son Limited’; and the change was effected in less than a fortnight after the agreement was registered.”

Hillman v The Commonwealth (1924) 35 CLR 260

48                  An award provided that it bound the Naval Board, the Minister for Navy and the Minister for Defence. It was held by Knox CJ, Isaacs and Gavan Duffy JJ, dismissing an appeal from Starke J, that the award was not binding upon the Commonwealth, either as an original party or by virtue of s 29(ba) of the Conciliation & Arbitration Act 1904 (Cth) (the counterpart of s 149), in respect of employment in the same activities subsequently carried on by the Commonwealth through representatives other than those aforementioned.

49                  Starke J said (at 264):

“The award fastens upon the officers who actually control the dockyard in the name of the King rather than upon the nominal controller – the King himself. But the award does not purport to, and does not in point of law, bind the King or the Commonwealth generally: it only binds them so far as an activity covered by the award is administered or controlled by the named executive body or officers – the Naval Board, the Minister for Navy or the Minister for Defence. If the activity passes from the administration and control of the named executive officers of State or the named administrative body to other officers of State or other administrative bodies, then, subject to any special provision of the Arbitration Act, the award ceases to operate or at all events does not bind those officers or bodies or the Commonwealth in their administration or control of the dockyard.”

50                  Turning to consider s 29, Starke J said (at 265 – 266):

“I see no reason to doubt the identity of the business. It was carried on in the same place, by the same staff, doing substantially the same kind of work. But there is, in my opinion, no successor, assignee or transmittee of the business of a party to the dispute or of a party bound by the award. Cockatoo dockyard and the business there carried on are and always have been, in substance, the property of the King in right of the Commonwealth, or else of the Commonwealth itself, under whatever control the business has been placed or in whatever body it has been vested. And the party to the dispute who is bound by the award is and has always been the King or the Commonwealth, in respect of the activities carried on by him or it under the administration and control of the Naval Board, the Minister for Navy, or the Minister for Defence. Consequently sec. 29 of the Arbitration Act does not, in my judgment, aid the plaintiff in this action.”

51                  Knox CJ and Gavan Duffy J agreed (at 268) with Starke J, and added (at 268 – 269):

“Finally, it is said that the parties actually named in the award were merely acting as agents for the Commonwealth in carrying on the business of the dockyard; that the agents who subsequently carried on the business were their successors within the meaning of sec. 29 (ba); that the contracts of those successors, being made on behalf of the Commonwealth, bind the Commonwealth; and that, as the contracts which they made with the members of the Union were subject to the provisions of the award, the provisions of the award bind the Commonwealth. The vice of this argument appears to us to be that it overlooks the fact that the Commonwealth Conciliation and Arbitration Act, and the award made under it, deal with actual employers, not with their agents. If the Union has been so unfortunate as to select for respondent, not an employer, but the agent of an employer, it cannot obtain an award to bind either principal, or agent, or agent’s successor. The award does not affect the agent or the agent’s successor because ex hypothesi they are not employing anyone; it does not affect the principal, who is the employer, because he is not a party to the award.”

52                  Isaacs J said (at 273):

“I entirely agree with [the] view [of Starke J] as to the Commonwealth being bound by the names referred to. It is not at all like a private individual employer whose manager, for instance, is named as respondent. In that case there is a distinct and separate individuality, the identification of principal and agent depending on the existence of extraneous facts not disclosed by the award. But in this it is the law, the Constitution itself, which without more identifies the Commonwealth as the employer and recognizes that the ‘Naval Board, the Minister for Navy or the Minister for Defence’ cannot possibly, except as convenient names for the Commonwealth, be the employers. A moment’s consideration of the consequences of the opposite doctrine will demonstrate that.

Reluctantly also, I feel bound to agree with the further view of Starke J. that this identification is limited to the activities of the Commonwealth carried on by the named representatives. As I put in argument, even though the original award remained unvaried, if members of the Union were employed in the Home and Territories Department, say, at Canberra, there would be no award obligation as to them.”

Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533

53                  The defendant in the Court of Petty Sessions took over a business, Denton Hat Mills Pty Ltd, and a business, Fairfield Hat Mills Pty Ltd. Both companies were bound by Commonwealth awards. The complainant in Petty Sessions was employed by Denton when its business was taken over and he remained in the defendant’s employment at premises which had been occupied by Denton until those premises were closed. Subsequently, the defendant moved Denton’s plant to Fairfield’s premises, and shortly after the removal, employed the complainant there. It was held by the Full High Court (Higgins, Gavan Duffy, Powers, Rich and Starke JJ) that the complainant had not established that the business in which he was employed at Fairfield’s premises was the business formerly carried on by Denton; and that the defendant was not bound, by virtue of s 29(ba) of the 1904 Act to pay the complainant at the rate fixed by the award for Denton.

54                  Citing s 29(ba), Higgins J said (at 536 – 537):

“United Felt Hats Pty. Ltd. is a corporation which has taken over the businesses of the Denton and Fairfield and other mills. The only way I can see of reading that section as applicable to the amalgamation is to adopt the principle of reddendo singula singulis [by applying each to each, that is, or a ‘distributive’ construction], business by business. In other words, as some covenants run with land, so the obligation runs, as it were with the business. The criterion is the business; and it appears to me that, unless there is evidence establishing that the business upon which the appellant is employed is the old Denton business, it must be assumed that the place is the criterion of the business; and, as he is not working at the Denton Mills but is working at the Fairfield Mills, he must be paid at the Fairfield rate. I only say that that is the prima facie test, and I wish to guard myself against deciding that the Denton business could not, under certain circumstances, be proved to have been transferred bodily, without qualification or exception, to Fairfield. But there is no proof of that at all.”

55                  Higgins J added (at 537) that –

“The proper remedy for the union and its members is to go to the Arbitration Court and to ask that Court to make such variation as may seem to that Court to be just.”

56                  Powers J agreed with the reasons of Higgins J and added (at 537):

“… and I also agree with what [Higgins J] has said as to an application to the Arbitration Court. I would point out that, although the award has worked satisfactorily for so many years, it is now impossible to continue it satisfactorily to either of the parties without variation. An application should be made to the Arbitration Court to make the award apply to the circumstances existing since the amalgamation of the different businesses carried on when the award was made.”

57                  Rich J said (at 537 – 538):

“There is no evidence in this case that Shaw was employed in the Denton business, and, assuming that sec. 29 (ba) applies to the case of an amalgamation, it must be read on reddendo singular singulis [by applying or assigning each to each]. During the argument I pointed out that the Arbitration Court was the appropriate tribunal to deal with this case. That suggestion has been strengthened by what has fallen from my brothers Higgins and Powers.”

58                  Starke J said (at 538):

“I rest my decision on the narrow ground that it is not established in point of fact that the complainant was employed in the business of the Denton Hat Mills to which the defendant succeeded.”

Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation [“ATOF”](1990) 171 CLR 216

59                  ATOF’s eligibility rule relevantly provided for persons employed in the transport industry by the Crown, statutory bodies representing the Crown, instrumentalities and authorities under the control of the Crown, including persons employed at an annual salary rate in any capacity by the Commissioner for Motor Transport (NSW) (“CMT”), together with “a successor or assignee or transmittee of the business of any of the foregoing.” CMT, a body corporate responsible for the administration of the Department of Motor Transport (“DMT”), was abolished (along with DMT) by legislation providing for the amalgamation of the functions formerly performed by the DMT and the Department of Main Roads (“DMR”). All the functions of the DMR and the major functions of the DMT were vested in a new statutory body, the Roads & Traffic Authority (“RTA”). The major activities of the RTA were the former functions of DMR and most of its staff were former employees of DMR. It was held by Mason CJ, Gaudron and McHugh JJ: (1) that DMT’s activities amounted to a “business” for the purposes of the eligibility rule, notwithstanding that DMT did not carry on a commercial undertaking for profit; (2) distinguishing Hillman (above) that the “successor” clause (above) was capable of applying to a succession to a business as between two statutory authorities, notwithstanding that the functions which they discharged were governmental functions performed by, or on behalf of, or for the benefit of, the Crown; (3) that RTA was the “successor” of CMT’s business because there was a substantial identity between the activities formerly carried on by CMT and those then carried on by RTA notwithstanding that RTA’s major activities were DMR’s former functions and that RTA’s staff were, predominantly DMR’s former employees; and (4) that, accordingly, ATOF had capacity to generate a dispute between itself and RTA.

60                  The Court said (at 226):

“Of all words, the word ‘business’ is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. Its meaning depends upon its context. It is common and apt to speak of 'the business of government': see, for example, Conway v. Rimmer. In the context of sub-r. (1)(a)(v) it is plain enough that the successor clause relates back to the activities of public authorities and departments of government, which do not or may not carry on commercial undertakings for profit, as well as to such undertakings. Indeed, the structure of sub-r. (1) suggests that the eligibility rule is primarily concerned with public sector employment; ….”

61                  Mason CJ, Gaudron and McHugh JJ noted (at 225 – 226) the respondents’ contention that, even if DMT’s activities under CMT did amount to a business, that business was, and remained, the property of the Crown, so that there could be no succession by RTA to the business of which CMT was the titular head, the argument being that CMT was the Crown’s agent and at all times administered DMT for and on behalf of the Crown, so that, it was said, the Crown remained the employer. Their Honours observed (at 226) that Hillman “provides some support for this proposition”, but went on to say (at 227 – 228):

“[In Hillman] [a]n appeal from the decision of Starke J. was dismissed. Isaacs J. agreed with the reasons given by Starke J. Knox C.J. and Gavan Duffy J. held that the appeal must fail whether the Commonwealth was the real respondent to the award – as Isaacs J. thought it was – or whether the Ministers named and the Naval Board were the real respondents.

Even if the view expressed by Isaacs and Starke JJ. be taken as correct, it is not decisive of the present case. In Hillman the question was whether the parties named in the award were the real respondents. If not, no question of succession to the Commonwealth’s business arose. Here a different question arises and it is to be determined as a matter of construction by reference to the particular and rather complicated provisions of r. 6 of the A.T.O.F. constitution. The question is not whether the Crown in right of the State is party to, or bound by, an award, but whether the A.T.O.F. has coverage in respect of the employees of a statutory body in a setting in which the statutory body is treated as the employer, even if the statutory body is or represents the Crown, and in which the proviso in the successor clause is looking to an employer as a successor to the business of the first employer. In that context sub-r. (2)(b)(i) is of special significance. The function of that provision is to exclude from A.T.O.F. membership persons employed in a professional capacity by twelve named statutory authorities, including the C.M.T.’s predecessor, the Superintendent of Motor Transport. The provision contains a successor clause in the same terms as that contained in sub-r. (1)(a)(v) subject only to the elimination of the proviso to that clause. It is obvious that, in sub-r. (2)(b)(i), there is scope for the concept of succession to a business as between two statutory authorities, notwithstanding that the functions which they discharge are governmental functions performed by, on behalf of or for the benefit of the Crown in the right of the State. That is how Gibbs J. saw sub-r (2)(b)(i) as operating in Holmes when the C.M.T. succeeded the Superintendent of Motor Transport. The successor clause in sub-r. (1)(a)(v) must operate in the same way. Accordingly, the question in the present case is not governed by the way in which the Court in Hillman applied s. 29 (later s. 61) of the Commonwealth Conciliation and Arbitration Act 1904 (Cth).”

62                  Turning to the “most difficult” question, whether on the facts RTA was “a successor … (etc)” of CMT’s business, their Honours (at 229) distinguished Shaw, above, on the basis that it related to s 29(ba) of the 1904 Act as it then stood and “turned on its own facts”.

63                  Mason CJ, Gaudron and McHugh JJ said (at 230):

“According to the natural reading of the language of the successor clause, the inquiry should be directed to ascertaining whether the business or the activities formerly carried on by the C.M.T. are still carried on by the R.T.A., notwithstanding that the R.T.A. also carries on one or more other substantial activities. The question then is whether the purpose of the clause viewed in this context requires a different reading for which the respondents contend. The natural reading, it is urged, could give the A.T.O.F. very wide, indeed ‘windfall’, coverage, even a coverage unrelated to employment in the business of the kind carried on by the former employer. There is force in this argument and it may be perhaps that some limitation would need to be implied in order to preclude such an extreme operation. However, there are two answers to the respondents’ argument. The first lies in the proviso to the successor clause and requires the successor to be an employer within sub-r (1)(a)(i) to (v). The second is that the Commission has a discretion under the Act to refuse to make an award at the instance of a registered organization which has a peripheral interest in the industry. Accordingly, on the reading of the clause which we favour, the ultimate issue is whether there is a substantial identity between the old activities and those now carried on by the R.T.A. which correspond with the old activities.”

64                  The High Court accepted (at 230) that not all the functions previously performed by DMT under CMT were then performed by RTA. Yet, their Honours held, the major part of DMT’s functions were then undertaken by RTA and the bulk of DMT’s staff had been transferred to RTA. The Court concluded (at 231) that –

“… the R.T.A is the successor of the C.M.T., notwithstanding that the major activities of the R.T.A. are the former functions of the D.M.R. and predominantly the staff of the R.T.A. are former employees of the D.M.R.”

North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477

65                  The issue here was whether, when North Western Health Care Network (“Network”) assumed the management of the provision of certain mental health services previously provided by the State of Victoria, Network, by virtue of the operation of s 149 of the WR Act, became bound by awards to which the State had been bound in respect of the provision by it of those services. The primary Judge (Marshall J) had made declarations (1) that, prior to 1 July 1995, the activities of the State comprising the provision of the health services constituted “part of a business” within s 149(1)(d); (2) that, on or after 1 July 1995, Network became a successor (etc) of those parts of the State’s business; and (3) that Network had become bound by the awards. An appeal to the Full Federal Court (Spender, R D Nicholson and Madgwick JJ) was dismissed.

66                  R D Nicholson J (Spender J (at 479) and Madgwick J (at 497) agreeing) cited Starke J in George Hudson (at 455), and observed (at 485) that the purpose of s 149 is to make the power to settle industrial disputes effective by extending the instrument of settlement of the award to “the ever changing body of persons within the area of such disturbances”. Features of the language used in s 149 identified by his Honour included the following (at 485 – 486):

·                    The reference to “the business or part of the business” is “to whatever it is [that] an employer who is a party to the industrial dispute has been conducting in order to fulfil the role of employer”.

·                    The words “the business” take their colour and context from the reference to the “industrial dispute” in relation to which the employer is involved.

·                    In strictness, “succession (etc)” is referable to property, not an activity, so that, strictly speaking, there cannot be a succession (etc) of a business, or part of a business. This points to a “broad” construction of s 149(1)(d).

67                  R D Nicholson J held (at 488) that, although based upon a different context, the reasoning in ATOF was “persuasive to the approach to be taken in relation to s 149(1)(d)”. His Honour concluded (at 489) that this provision “intended a general and not legally specified characterisation, “so that the words “the business” in s 149(1)(d) “encompassed conduct by the State … and so encompassed the provision of the State’s mental health services”.

·                    Turning to the “transmission” issue, R D Nicholson J said (at 494):

“Once it is accepted that the object of the transmission must be ‘the business or part of the business of an employer who was a party to the industrial dispute’ attention is directed to what it is that the employer who is party to the dispute is doing. It is that which identifies the object of the transmission. The fact that government as an employer may have continuing functions in relation to the provision of mental health services is not a determinative factor in relation to whether there has been a transmission of the relevant business of the employer. Specifically, transmission of part of the business is expressly made possible by the section in determining the extended application of an award.

I also do not agree that the primary judge fell into error because he looked at what was occurring before contracting out and contrasted it with what was occurring after contracting out without examining the nature of the nexus between the two stages. Once it is accepted that the reference to ‘the business’ in s 149(1)(d) has the wide reference which the primary judge found, it is not necessary to search for some legal form of succession, assignment, transfer, corporate acquisition or takeover. What is necessary is to determine as a question of fact whether ‘the business’ understood in the wide sense so found has been transmitted to other hands. That does not require a search for some legal mechanism as a nexus between the pre and post transmission stage.

It follows that I do not accept the appellant’s argument that the ‘substantial identity test’ utilised in the ATOF case is wrong in the context of the WR Act.

I agree with the submission for the respondent that the High Court in the ATOF case was determining whether there was a transmission and the court there developed a concept or a criterion for identifying whether or not a transmission had occurred. The formulation of that concept was not dependent upon the particular nature of the rule in that case.”

68                  His Honour (at 494) noted that the same patients had become Network’s responsibility; that medical records and stock had been transferred; that leased assets had been assigned; and that staff had been transferred. In concluding that there was a “transmission”, his Honour said (at 494 – 495):

“While the State retained control over funding and audit that was but the consequence of it having transferred the responsibility for the provision of the relevant mental health services so that it was now required to pay for the delivery of such services. What was involved was a transmission of the core of the relevant services not, as in Crosilla or Kelman v Care Contract Services [1995] ICR 260, a peripheral activity.”

69                  In his concurring judgment, Spender J said (at 479) that the arrangements made at the time –

“… make it plain that there was a transfer of the management and provision of mental health services from the Department of Health in the State of Victoria to the hospital/agency, the ‘date of transfer’ referring specifically to the date at which the activity of providing adult mental services in the relevant area ceased to be carried on by the State of Victoria and commenced to be carried on by the respective Network.”

70                  His Honour said (at 479) that the State’s retention of control over funding and audit meant that the State continued to meet the cost of the provision of the health services, but the industrial activity constituted by the management and provision of those services previously part of the State’s business, was then the business or part of the business, of Network.

71                  Spender J noted (at 479) that the real question before Marshall J was whether the award applied to two members of the respondent Union. However, since Marshall J’s judgment, an Agreement between the relevant parties had been negotiated and certified, so that, as Spender J said (at 480):

“The position … is that ongoing industrial relations are now governed by the Agreement and the matters in issue are of essentially historical significance.”

72                  In his concurring judgment, Madgwick J (at 503) adopted a beneficial construction of s 149. His Honour noted (at 497) that, with immaterial exceptions as to senior functionaries of government, the “Social Welfare” Case (R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297) held that the award system could extend to “industrial disputes” between all employers and all employees.

73                  Madgwick J went on (at 501) to note that the main point in ATOF (which was “not really apposite” in North Western) was the reference in the rules to “a successor …”. But, his Honour added (at 501):

“However, what is noteworthy is that the Court implicitly rejected any idea that a statutory process consisting of (a) the ‘abolition’ of one statutory corporation, (b) the ‘substantial amalgamation and rationalisation [of its and other statutory bodies’] functions’ and (c) the ‘imposition’ of those functions on a new corporation (see at 222-223), could not or did not fall within the process comprehended by the succession clause in issue.”

74                  His Honour (at 502) explained “aspects of a single overriding conception” of s 149, namely –

“… that settlements by award-making, aimed at quelling present industrial disputes and the prevention of future disputes, should be kept effective, pending conscious variation or replacement of the award, regardless of mere changes in arrangements as to which legal entity might be the employer of an unchanged industrial class of employees, regardless of such matters as whether the original employer had other classes of employees as well and may have remained their employer, and regardless of whether the legal ownership of all of the plant and equipment used by the employees for their work and the other resources of the employer utilised in the undertaking should have likewise changed.”

Australian Rail Tram and Bus Industry Union v Torrens Transit Services [2000] FCA 1683 (Mansfield J, 21 November 2000)

75                  The applicant unions claimed declarations under (amongst other provisions) s 170MB of the WR Act that the respondent (“TTS”) was bound to employ persons engaged to drive buses operated by TTS on bus routes formerly operated by the State Transport authority (retitled TransAdelaide) (constituted by the State Transport Authority Act 1974 (SA)) under terms and conditions of employment in accordance with certain certified agreements.

76                  The parties agreed that the Court should deal with the following preliminary issue:

“Whether TTS is bound by the [certified agreements] by operation of s170MB of the Act.”

77                  Mansfield J noted (par 3) that the parties had anticipated that if this question were answered affirmatively, it was likely that issues as to the extent to which the agreements were binding could be resolved privately.

78                  Mansfield J further noted that Community & Public Sector Union v Stellar Call Centres Pty Ltd (1999) 92 IR 224 concerned the question whether awards and certified agreements binding Telstra in respect of employees who take customer calls at Telstra operated call centres, bound Stellar, a joint venture company of Telstra and another company. Stellar contracted with Telstra to respond to Telstra customers who dialled the Telstra customer inquiry number as part of a virtual single call centre when Telstra’s own facilities overflowed. Under that arrangement, the Telstra customer was unaware of the fact that a Stellar (as opposed to Telstra) employee was responding to the inquiry. At first instance, Wilcox J had held that s 149(1)(d) and s 170MB(1) applied since, in operating the “outsourced” call centre, Stellar was a “successor (etc)” of part of Telstra’s business. (However, as will be seen, this decision was, subsequently, to be reversed by a Full Federal Court.)

79                  Mansfield J also noted the decision of Einfeld J in the present case.

80                  Mansfield J further observed that questions may arise about the individual circumstances of the case at hand. His Honour said (par 28):

“The fact of those slightly different geographical areas, and of the different terms and conditions which did or may have applied to the employment of employees of TransAdelaide within the different areas, either under the Port Adelaide Agreement or under the Mile End Agreement or otherwise, or to employees of Serco or Hills Transit gives rise to the possible need later in these proceedings to consider the individual circumstances of each employee. It also gives rise to the need to consider the applicability either of the Port Adelaide Agreement or the Mile End Agreement or some other terms of employment to them in comparison to the terms of employment now offered to them by TTS. The parties are agreed, however, that those matters of ‘detail’ (not to underscore their significance in any way) are all subject to the issue of principle which I have separately decided to hear and determine before addressing those other issues. It is agreed that, if that issue of principle is decided in the affirmative, TTS will be bound by both the Mile End Agreement and by the Port Adelaide Agreement to some extent (that is, to some degree, s 170MB(2)(c) will operate). It is also acknowledged that there are, in some respects, differences between the Port Adelaide Agreement and the Mile End Agreement, and that by virtue of the way in which TTS and TT now operate to provide contract services for the East West area and the City Free area, questions may arise about the individual circumstances of each employee. It is not now necessary, for the purposes of answering the question now before the Court, to address those differences.” (Emphasis added)

81                  Mansfield J went on to say (par 29):

“It is sufficient for present purposes to find that the service contract between TT and the PTB to a significant degree provides for the provision of passenger transport services by bus which were previously provided by TransAdelaide, (and to a lesser degree provided by Serco, and by Hills Transit) under previous service contracts, including to a significant degree services which certain employees of TransAdelaide carried out under the terms of the Port Adelaide Agreement or the Mile End Agreement.”

82                  His Honour (par 49) agreed with Spender, R D Nicholson and Madgwick JJ in North Western and with Marshall J in Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 67 IR 347 that ATOF was relevant, notwithstanding that it dealt with an eligibility clause. In his Honour’s view (par 54) North Western indicated the following:

“(1) the expression “successor, transmittee or assignee … of the business” is to be interpreted in a practical and broad rather than a technical way which might require some formal instrument of succession or transmission or assignment of the assets of a business,

(2) where the ‘business’ concerned is the performance of some functions by or on behalf of government, the legislative or administrative structure under which the performance of those functions or certain of them comes to take place may indicate whether in a practical and broad sense there has been a succession transmission or assignment of that ‘business’ or of a part of that business, and

(3)               in addition there will need to be a substantial identity of activities in the business or part of the business being carried out by the new employer when compared with those previously being carried out by the former employer.”

83                  Mansfield J went on to say (par 54):

“Those conclusions … support the contention of TTS that the ‘substantial identity of activities’ test is not of itself a sufficient test to determine if there has been a succession transmission or assignment of a business. I think that is plain enough in any event. For example, if the business of a local hardware store were simply to come to an end, and the premises were then some months later purchased and then operated by an entirely new and independent operator as a local hardware store in much the same way, with some one or more of the same employees, I do not think s 149(1)(d) would then have been intended to apply to the new operator of the hardware business simply because there was a substantial identity of activities being performed in the two businesses. Cp. Bransgrove v Ward & Syred [1931] AR (NSW) 272. To conclude otherwise would be to attribute to the words ‘successor transmittee or assignee’ little or no meaning as the only focus would be upon the identity of the business activities. But I respectfully agree with the reasons given by R D Nicholson J and Madgwick J in that case for concluding that those words should be given a practical and broad meaning.”

84                  Mansfield J next said that these views were also reflected in the more recent decision of the Full High Court decision in PP Consultants Pty Ltd v Finance Sector Union (2000) 176 ALR 205, which is considered below.

85                  Mansfield J noted that in the Stellar case, Wilcox J had regarded the question of transmission as governed by North Western; and that Einfeld J had taken a similar approach in the present matter.

86                  Mansfield J said (pars 79, 80):

“ultimately …, as Einfeld J stressed in the EN case at [77], the question of substantial identity of activities is one of fact. Having regard to the nature of the activities carried out by TT or TTO, the areas in which those activities are carried out, the nature of the tasks carried out by the bus drivers employed by TTS and provided by TTO to carry out its business, and the terms of the service contract with the PTB, I find that there is a substantial identity of activities between those carried out by TTO on behalf of TT in its business and those previously carried out by TransAdelaide in that part of its business to which I have referred.

That finding, together with my conclusion that TT by virtue of its service contract with the PTB in the circumstances has in a practical sense ‘taken over’ part of the business of TransAdelaide so as to qualify as a successor assignee or transmittee of part of TransAdelaide’s business, leads me to the conclusion that TT is a successor transmittee or assignee of that part of TransAdelaide’s business.”

87                  His Honour went on (pars 82 – 83) to hold (following Einfeld J in the present matter) that s 170MB(2) clearly contemplates that the new employer may not be the immediate “successor (etc) …”, and that the Court should be slow to permit a device of sub-contracting to avoid the proper application of s 170MB. Mansfield J held that the activities carried out by TransAdelaide as part of its business were far from “peripheral”, but rather were “core activities”; so that TTS was a “successor (etc) …”, although not immediate, of a part of the business of TransAdelaide.

88                  His Honour expressed his conclusion thus:

“CONCLUSION

For those reasons, I am of the view that TTS is bound by the Mile End Agreement and/or the Port Adelaide Agreement by operation of s 170MB(2) of the Act. However, it is clear that it is so bound only to the extent that those agreements respectively relate to the part of the business of TransAdelaide which has in fact been transmitted to TTS. [Emphasis added]

Having given that answer to the question identified by the parties, I will now hear them as to the terms of any orders or declarations which ought now to be made and I will then adjourn the proceeding to enable the parties to undertake the negotiations to which reference is made in pars 3 and 28 above.”

PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 (Full High Court)

89                  A Bank closed a branch and appointed an agent to conduct similar activities in conjunction with the agent’s pharmacy business. The agent employed former employees of the Bank who were entitled to the benefit of an award. The question was whether the agent had succeeded (etc) to the Bank’s business, or part of it. At first instance, Mathews J had held that there was no such succession; but the Full Federal Court (Wilcox, Ryan and Madgwick JJ), in allowing the appeal, remitted the matter to Mathews J to determine whether, in respect of a particular named employee, the agent was bound by the award. However, an appeal to the Full High Court (Gleeson CJ, Gaudron, McHugh, Gummow and Callinan JJ) by the agent was allowed.

90                  In considering the meaning of business in s 149(1)(d) Gleeson CJ, Gaudron, McHugh and Gummow J adverted (par 10) to the references in ATOF to ‘the business of Government”; and to the question of succession being answered by determining whether there was “a substantial identity between the old activities [of the CMT] and those now carried on by the RTA which correspond with the old activities.” (My emphasis).

91                  Their Honours said (par 12):

“As was pointed out in [ATOF] ‘the word ‘business’ is notorious for taking its colour and its content from its surroundings’. Thus, for example, the expression ‘the business of government’ signifies something quite different from the expression ‘the business of grazing’ ….”

92                  Their Honours went on to say (par 13):

“While the notions of ‘profit’ and ‘commercial enterprise’ will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business, they play little, if any, role in identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word ‘business’ takes on a special or particular meaning in the expression ‘the business of government’. It is not because, as a matter of ordinary language, ‘business’ means or includes activities undertaken in the course of business.” (Emphasis added)

93                  Callinan J noted (par 38) that PP Consultants was not concerned with the transfer of governmental activities from (as in ATOF) one branch of government to another or (as in North Western) from government to the private sector.

Stellar Call Centres Pty Ltd v CEPU [2000] FCA 106 (Full Federal Court)

94                  As mentioned, the decision at first instance in the Union’s favour was reversed on appeal to the Full Court (Ryan, Lee and Branson JJ). The Full Court applied the decision of the Full High Court in PP Consultants. Their Honours said (par 30):

“The High Court must be taken impliedly to have rejected the suggestion of the Full Court in Finance Sector Union v PP Consultants at [33] that ‘it is logical to focus on the nature of the activities undertaken by the two employers and the question whether there is any material change in the nature of the employees’ duties or working conditions’. As we understand it, even if there be complete identity between the duties and working conditions of the relevant employees of both employers, that will not attract the application of s 149(1) unless the business in which those duties are performed for the new employer is in substance identical in character with the business, or a distinct part of the business, of the presumptive transmittor.”

95                  Ryan, Lee and Branson JJ went on to say (par 32):

“… The activities of Telstra conducted by C&C Sales are activities in support of Telstra’s businesses in the telecommunication industry; they are not themselves, in our view, the business or part of the business of Telstra. That business can appropriately be characterised as providing telecommunications services to its customers. In the course of conducting that business, Telstra is called upon to respond to enquiries, requests for services and complaints from its customers, including those made by telephone. However, the making of those responses is not a distinct ‘part’ of Telstra’s business within the meaning of s 149(1), as explained by the High Court, any more than, for example, cleaning undertaken as a necessary aspect of the conduct of a restaurant is a ‘part’ of the business of the restaurateur.”

THE REASONS FOR JUDGMENT AT FIRST INSTANCE

(a)               Introduction and background facts

96                  Relevantly, his Honour’s initial reasoning proceeded as follows:

q                   The central issues were whether the activities of CES/EAA (Employment Assistance Australia) as departmental organisations who were parties to an industrial dispute from which the awards and the Agreement originally resulted, constituted a “business” for the purposes of the ss 149(1) and 170MB(1); and whether EN/ENA had become the successors, assignees or transmittees of that business, or a part of that business.

q                   Therefore, it was necessary to consider whether the relevant services provided by these departmental bodies (which, the CPSU alleged, were then effectively provided by EN) were capable of characterisation as a “business” susceptible of transmission in the manner provided for by s 149(1). If they were, what was then largely a question of fact arose as to whether there was such a transmission. This exercise required the Court to consider evidence relating to the respective businesses and activities of CES/EAA and those of EN in order to establish whether such a degree of identity existed between them at the relevant time as to support a conclusion that the business of the former was transmitted to the latter.

97                  His Honour described the historical background as follows:

·                    The Department had been responsible for the provision of employment services to the Australian public.

·                    CES was established by the Re-establishment & Employment Act 1945 (Cth) with functions including the following:

“… to provide services and facilities in relation to employment for the benefit of persons seeking to become employed, to change employment or to engage labour, to provide facilities to assist in bringing about and maintaining a high and stable level of employment throughout the Commonwealth ….”

·                    CES served as a “labour exchange”, providing job placement and other services including the registration, screening and vetting of job seekers and the assessment of their needs, expectations and capabilities, the canvassing of employers for suitable vacancies, matching the two in order to place people in employment, and following up on referrals to achieve actual placements. Ongoing monitoring of placements also occurred. “Case management” was provided for those who were considered to be “long term” unemployed, and for whom a structured or managed program was felt necessary in order to increase the prospect of finding employment for them. CES would sometimes contract with non-departmental bodies to provide job seekers with specific services such as short training courses. This was referred to as the “labour market program”. CES was administered according to area and there were at one time over 300 branches around Australia. Its services were free to the public, except for certain “advanced” services offered to employers, such as “CES Plus”, for which a fee was charged. The employees of CES were public servants employed under the PS Act. For the most part, CES consisted of “employment officers”, who operated the “labour exchange” system.

·                    EAA was established by the Employment Services Act 1994 (Cth) (“the ES Act”) as a “sister” organisation to CES, to take over the individual “case management” of longer-term unemployed persons to assist a participant to obtain sustainable employment. EAA had the services of up to 250 externally contracted “case managers”, operating on a “fee for service” basis. The ES Act established the Employment Services Regulatory Authority (ESRA) to regulate EAA’s “case management” system. The scheme provided that ESRA would award tenders for the services on behalf of the Commonwealth to organisations it had accredited for the purpose. Participation in EAA’s case management system was only open to persons registered with CES and referred by it to the system according to statutory guidelines. The system required each referred unemployed person to enter into a “Case Management Activity Agreement” with a particular case manager. In general, the ES Act regulated the entire provision of the services established or consolidated under it. The contracted services included assessing each participant’s experience, abilities, goals and needs, identifying impairments to long term employment, providing information, advice and counselling, managing the Activity Agreement, surveying and liaising with potential employers, and generally monitoring the participant’s progress after employment was obtained.

98                  The primary Judge described the changes in the way employment services were delivered, including the establishment of EN and ENA as follows:

·                    In August 1996, the Government announced that CES and EAA were, for all relevant purposes, to go out of existence (although the statutes establishing them still stood); instead, services would be provided by contracted bodies who would compete first for government tenders and when won, then for “customers”(job seekers). The contractors would be paid according to their success in achieving various performance indicators and “delivery outcomes” set by the Department. In effect, they would be paid by the Commonwealth, according to how successful they were in placing people into jobs. The Department’s Annual Report (1996/7) said that the scheme was intended:

“… to assist the efficient and effective functioning of the labour market by reducing unemployment through the provision of services to job seekers and employers. These services include job brokerage, facilitating skills formation and retention in individuals, industries and regions, and ensuring that statutory case management services for the disadvantaged and long-term unemployed clients are provided cost effectively and fairly through open competition among providers.”

·                    A Ministerial Statement made in 1996 entitled “Reforming Employment Assistance” stated that the Government was to retain some services, but all others were to be contracted out to the “Job Network” of employment service providers, of which EN/ENA were to be established by the Commonwealth as one. The system was to be transformed into a competitive market for employment placement services, with a focus on incentives to attain actual outcomes in the form of persons placed in sustainable employment. The Minister explained:

“The Government has concluded that the public sector should continue to provide, through the service delivery agency [Centrelink – see below], a uniform national service for the registration of job seekers; for the assessment of job seekers’ eligibility for employment assistance; for referral of clients to assistance in the employment placement market; and for administering the activity test and enforcing compliance with conditions of assistance. For client convenience, the agency will also provide access to vacancy information, self-help facilities and on the spot referrals to employers and employment placement enterprises (EPEs). With these exceptions, however, all other employment placement functions will be contracted out to [EPEs] including the corporatised EPE [that, is EN], in a fully contestable market for employment placement services.”

·                    Centrelink (created on 1 July 1997 pursuant to the Commonwealth Services Delivery Agency Act 1997 (Cth) within the Department of Social Security (DSS)) performs some of the functions previously discharged by CES, most notably the initial registration of unemployed persons, a function that it began in October/November 1997. Centrelink also makes available, at some of its branches, a “self-help” computerised searchable database of employment opportunities. The Ministerial Statement described Centrelink as integrating some of the “public contact services” of both CES and EAA. It was the “first port of call” and a “one-stop shop” to perform functions of the regional offices of DSS, and to provide the public with access to the employment scheme. Its employees are employed under the PS Act. In addition to its function as a place of registration for job seekers and a source of referral for these persons to Job Network entities such as EN, it administers the unemployment benefits scheme, which is a distinct social security function. Notwithstanding the creation of Centrelink, CES/EAA continued to provide their “labour exchange” and “case management” services until 30 April 1998.

·                    With respect to the staff of CES/EAA, the Minister stated:

“Many staff employed by the CES and [EAA] would eventually become employees of a new public employment placement enterprise [ie EN]. Other CES staff along with most staff in the current DSS delivery network would transfer into the proposed service delivery agency [ie Centrelink]. Others will remain with DEETYA…”

(b) Did the activities of the departmental entitles constitute a “business” for the purposes of s 149(1)(d)?

99                  His Honour noted that in North Western R D Nicholson J (Spender and Madgwick JJ agreeing) had held that –

“… the words ‘the business’ take their colour and context from the reference to the ‘industrial dispute’ in relation to which the employer is involved.”

100               Observing that the word “business” is a term of “wide import” and its particular meaning dependent upon its context, the primary Judge cited the following statement by the High Court in ATOF (at 226):

“The reference to the departmental activities standing outside the world of ‘productive industry and organized business’ ... should not be understood as a statement that the departmental activities did not constitute a business within the meaning of the eligibility rule. Of all words, the word ‘business’ is notorious for taking its colour and its content from its surroundings: …. Its meaning depends upon its context. It is common and apt to speak of ‘the business of government’: see, for example, Conway v Rimmer [1968] A.C. 910, at p.952.”

101               His Honour said that not all activities of government are capable of characterisation as “business”. However, the wide term “business” does not simply refer to commercial enterprises carried on for profit, or to those which have monetarily quantifiable “goodwill”, or where the enterprise paid for the opportunity to become involved in the relevant activity. In many cases it will apply simply to activities which cost money, or on which money is spent, in contrast to voluntary work for charitable and like purposes. The High Court’s express acceptance in ATOF of the aptness to speak in some contexts of the “business” of government, and its general reasoning on the subject were held in North Western to be “persuasive of the approach to be taken in relation to section 149(1)(d)”, despite the different factual and statutory contexts: per R D Nicholson J at 157, and Madgwick J at 166. This suggested that the same approach is applicable to the terms “successor, assignee or transmittee”, with which the term “business” is used in the WR Act, and which must for similar reasons be interpreted generously.

102               There was no reason, the primary Judge held, to consider that the activities of public servants which are capable of giving rise to an “industrial dispute” to which the employer is capable of being a party, and which leads to an award within the meaning of section 149, should not be construed as a “business” for these purposes.

103               His Honour said:

“It follows that the provision of the relevant employment services by employees of CES/EAA prior to 1 May 1998 constituted a ‘business’ capable of transmission to a successor employer within the meaning of section 149(1)(d). I would add that whilst on the facts, and on existing authority, the description and characterisation of the actual activities of CES/EAA constitute a ‘business’ of their own accord, such a factual inquiry may actually be superfluous since the proper construction of the statutory provision requires that the term ‘business’ take its meaning from the activity in which the employer was involved and from which the industrial dispute which led to the awards and the agreement arose: see North Western at 157. The result of this exercise speaks for itself.”

(c) Was there a transmission of the business?

(i) The test

104               His Honour noted that in ATOF the High Court considered the meaning of the words “successor or assignee or transmittee” in the context of the eligibility rule of a registered organisation under the predecessor to the WR Act, and said (at 230) –

“... on the reading of the clause which we favour, the ultimate issue is whether there is a substantial identity between the old activities and those now carried on by the RTA which correspond with the old activities.”

105               The primary Judge said that the “substantial identity” test is the correct test to be applied when considering whether a transmission under s 149(1)(d) has occurred, citing North Western at 157, 162-163, 169, per R D Nicholson and Madgwick JJ respectively; Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (Industrial Relations Court of Australia, Marshall J, 31 October 1995, unreported); and Meat & Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 at 94.

(ii)               The evidence

106               His Honour, referring to EN’s memorandum of association, said that EN’s central object was to provide employment services based on the assessment of the particular qualifications of job seekers for employment, and to increase their prospects of gaining it, in accordance with the requirements of the Commonwealth, which bears the cost of their provision; and that the stated purpose of ENA is to provide EN with “administrative and other services”, although in reality it provides EN’s “employment services” themselves, since EN has only one employee.

107               The primary Judge, noted that what was called “CES job brokerage activities” was described for the new providers, such as EN (after CES/EAA ceased to operate), as “labour exchange” services. Organisations such as EN involved in the “Job Network” program basically provide potential employers and job seekers with job matching services, job search training, general assistance, and sometimes longer term “intensive assistance”.

108               The principal contract consisted of six parts and five schedules. In the actual scheme established, there were three categories of service, labelled FLEX 1, 2 and 3 (“FLEX” denoting “flexible labour exchange services”). Payment varied according to the category of person placed, and the minimum duration of time that each person remains in the employment arranged.

109               FLEX 1 contemplated “job matching”: canvassing employers for suitable vacancies and matching suitable job seekers to these vacancies. Payment depends on the provider placing a person into a job covered by an award or agreement complying with minimum legal standards for at least 15 hours in any period of five days, or direct placement into an apprenticeship or traineeship. Placement into certain types of employment will not attract the payment.

110               FLEX 2 is “job search training”, i.e. training and assistance in acquiring skills for actually searching out and obtaining employment. The service provider and the job seeker together formalise a written plan called a “job skills search plan”, with the provider receiving FLEX 1 fees and a bonus if the relevant job seeker receiving FLEX 2 services remains in the job for 13 consecutive weeks, with other conditions.

111               FLEX 3 is a more complex set-up, in which payment is made in stages. It contemplates the provision of services to a person in need of considerable assistance, training or re-training to obtain and hold a job. This intensive assistance is specified in an “Activity Agreement” which is drawn up by the job seeker and the provider, although it is, in fact, an agreement with the Commonwealth, and not the specific provider. The provider is to provide FLEX 3 services for a period of 52 or 78 weeks, depending on the category of job seeker. The provider receives FLEX 1 fees as payment for “FLEX 3 persons” when FLEX 1 outcomes (the “primary interim outcome” for a FLEX 3 job seeker) or employment for 13 consecutive weeks are attained. Payment is made partly when the support commences and the Activity Agreement is signed, as a type of “up-front” fee. Further fees are payable upon “Final Outcome”, which is an “interim outcome” followed by another “interim outcome”.

112               His Honour concluded that these are substantially the same activities as were previously carried on by CES/EAA. As regards the higher level services, EN is the largest single provider in the Job Network of “intensive assistance” (42%), previously the business of EAA (where it was labelled “case management”). The evidence of Mr Halstead made clear that aside from the new ‘FLEX 3’ environment within which it occurs, there was no significant practical difference between the “intensive assistance” role of EN consultants and the “case management” role of EAA and its outside contractors. In summary, his evidence was that prior to 1 December 1997, CES determined initial eligibility for intensive assistance/case management and would refer job seekers to EAA or contractors. After this date, Centrelink determined eligibility and provided the referrals. It continued to do so after 1 May 1998, the only difference being that it would refer job seekers to EN, or one of the other providers. Centrelink does not embark on the detailed skills assessment, except to the extent that it registers persons and refers them on.

113               For the transitional period, the bulk of these “transferred” employees (now called “employment consultants”) did not receive any new training, apart from one day’s classroom orientation relating to the new EN information database. In other words, they performed all relevant EN activities, using the skills formerly at the disposal of the previous employer and covered by the awards. During the transitional period, briefings were held for potential recruits from CES, in order to explain to them the “different operating environment” that they would encounter in EN, were they to take up employment there. It appears that these “training sessions” and briefings were principally to instil an awareness in those previously working within the public service that EN would be competing operationally in the employment services market, and the corresponding adjustment to the employees’ thinking and practices that this imperative entailed. Such training was geared primarily not to re-training in new operating skills, since they were still to be operating a labour exchange, but was rather attitudinal, directed at behaviour and operation in a different trading environment. These facts all suggested that the employees were able to make the change relatively smoothly, and that the business of providing employment services for EN involved substantially identical tasks to those they had previously performed.

114               The Judge noted that there was a conflict in the evidence on the question whether there were significant differences between the “business” of CES/EAA and that of EN.

115               His Honour said (par 62):

“That the structural or organisational framework altered upon transmission from government to ‘private’ employers is undoubted but in my opinion this change did not in itself mean that the actual ‘business’ or activities were any different. There is no reason to believe that public service personnel were not ‘substantially focussed’ on achieving the outcome of employment, and although obviously not as directly affected by actual placements as when success is linked to reward, individually they were surely required to perform in order to maintain their positions or gain advancement.”

116               The Judge held that any differences in the duties of staff were “not relevantly significant”. His Honour said (par 65):

“Moreover, FLEX 3 services are to my mind substantially identical in character to EAA’s ‘case management’ services, and were intended to replace them. They are both directed at long term assistance, and the fact that FLEX 3 is now ‘outcomes’ based whereas case management presumably continued irrespective of success, does little to diminish their identity. Moreover, to credit too much to the profit factor would mean that no cases of ‘outsourcing’ from government could ever amount to transmission. In any case the employees themselves did not suggest that this change has affected the substance of their actual activity.”

117               The Judge noted that it was common ground, in this case, that assets and stock previously used by and belonging to the department were transferred to and were being used by EN, including telephones, computers, furniture, etc. Leases of properties used by the CES/EAA had been transferred to EN, which used the premises to conduct its business. EN had taken over much of the ‘customer’ base of CES/EAA, especially those on long term programs, and supplied services of a substantially similar nature to those previously provided. It took the benefit of relationships with particular employers and with job seekers formed before and during the transitional period.

118               As for the numbers of employees, most of those employed by CES/EAA were transferred to ENA when it commenced to deliver employment services. Even before 1 May 1998, approximately one hundred departmental employees on leave without pay had formed a “start-up team” at ENA, in readiness for the commencement of operations after that date. When operations commenced, ENA had approximately 1200 employees, about 1100 of whom had been working in or for CES. Just over 700 of these were departmental employees while 400 had been temporary departmental employees. They all performed substantially the same tasks as they had done previously.

(iii)             Application of the test to the evidence

119               His Honour held that the special place of EN in the scheme, its establishment by the Commonwealth, the contents of the incorporation documents, the contracts (etc.) established legal privity and a nexus of the kind said by EN and ENA to be required by s 149(1)(d). However, it is not necessary to establish a legal relationship of this kind. All that is required for the purposes of the WR Act is to show a business has been transmitted. In North Western (at 154 and 157), R D Nicholson J pointed out that the concepts of succession, transmission and assignment are to be given a general, non-legally specific characterisation since, strictly speaking there cannot be succession (etc.) of a business in this sense. At 162, his Honour rejected the appellant’s argument that some type of legal nexus needed to be shown and held that transmission is a question of fact requiring an inquiry, saying (emphasis added) –

“I also do not agree that the primary judge fell into error because he looked at what was occurring before contracting out and contrasted it with what was occurring after contracting out without examining the nature of the nexus between the two stages. Once it is accepted that the reference to “the business” in s 149(1)(d) has the wide reference which the primary judge found, it is not necessary to search for some legal form of succession, assignment, transfer, corporate acquisition or takeover. What is necessary is to determine as a question of fact whether ‘the business’ understood in the wide sense so found has been transmitted to other hands. That does not require a search for some legal mechanism as a nexus between the pre and post transmission stage.”

120               The primary Judge said (70):

“[T]here is no significance in the fact that it is not ENA but EN that is contracted to the department because section 149(1) would be rendered ineffective if employers were able to artificially avoid award obligations by utilising a holding or related company. In any case section 149(1) speaks of ‘successors etc’ whether ‘immediate’ or otherwise. However, it is significant that when EN managed the operations of CES/EAA for the duration of the transitional period, it was bound by and subject to the awards in question. I do not think it is in any way inaccurate to say, as the CPSU did in its submissions, that:

‘It is evident from the terms of the [transitional contract] that the Commonwealth intended that EN would manage the CES and EAA as part of a process of transition to a new system in which EN would play a major role. EN was deliberately placed in a special position in the existing system to facilitate its role in the new system.’”

121               His Honour concluded that both EN and ENA are, as counsel for the CPSU had put it, “emanations of the Commonwealth”. Each is, as the Prime Minister certified, a “Commonwealth authority” for the purposes of s 7(1) of the PS Act. Whilst they are run as fully competitive enterprises along commercial lines, both in their conception and in their operation, they essentially provide services in accordance with departmental policy. The Commonwealth is in complete control of the companies. Not only is it the sole shareholder but it determined, in a real sense, the content of the companies’ incorporation documents. It is artificial to conceive of them as anything other than two Commonwealth corporate entities in the business of providing employment services to the community relevantly indistinguishably from CES/EAA. In a media release by Minister Vanstone of 10 December 1996, EN was described as the ‘successor” to CES, and in a media release of 26 February 1998 by her successor Minister Kemp, it was said that EN “replaced” CES.

122               The Judge noted EN’s argument that a distinction should be drawn between the functions of the department and its agencies and the means of discharging those functions; the department’s principal function is to ensure that employment services are provided; and that even if this function can be a “business” (which EN disputes), the department has, in essence, retained this function, and so no transmission has occurred. What has changed are the means of discharging the function. But, his Honour said, the same distinction (between the retained functions of government and the outsourced means of performing these functions) was rejected by R D Nicholson J in North Western for reasons that are equally applicable in this case. R D Nicholson J noted the appellant’s contention that the responsibility for the provision of health services still rested with the State of Victoria, and that the only difference of the new system of delivering the services was that the method or means of doing so had been re-organised. In other words, the appellants contended it was not shown that the function of providing health services had been transferred, but that it continued where it had always been; referring to Crosilla v Challenge Property Services (1982) 2 IR 448 at 456-7. But R D Nicholson J rejected this distinction (at 163):

“I do not accept the primary argument for the appellant that nothing has changed because the function of providing mental health services remains with the State of Victoria and all that has changed are the ‘means of performance’. Once it is accepted that the object of the transmission must be ‘the business or part of the business of an employer who was a party to the industrial dispute’ attention is directed to what it is that the employer who is party to the dispute is doing. It is that which identifies the object of the transmission. The fact that government as an employer may have continuing functions in relation to the provision of mental health services is not a determinative factor in relation to whether there has been a transmission of the relevant business of the employer. Specifically, transmission of part of the business is expressly made possible by the section in determining the extended application of an award.”

123               The primary Judge held that the “functions”/“means” dichotomy could not be sustained. True, the department remained in existence and retained its overall functions, but the business of CES/EAA, ie the day to day activities that kept their employees “busy”, was quite capable of transmission, even if ultimate responsibility for ensuring that services were provided was not relinquished.

124               His Honour said (83):

“While the factors pointed to by EN may have substantially affected features, even important features, of the business or businesses in question, I consider that the businesses themselves did not materially change. The ethos and legal framework changed so that the governing regime moved from a statutory base to a contractual base. However, EN is in the business of providing labour exchange and intensive or longer-term assistance services, and these businesses were transmitted to it from CES/EAA. I find that a transmission of the businesses to which the awards and agreement related occurred on 1 May 1998.”

(d)               The “parties bound” clause and the PS Act

125               The Judge noted EN’s argument that the dispute giving rises to the awards limited the scope of the awards to that class of persons. But, in his Honour’s opinion, the continued references to the APS in the awards and in the transcript of the award proceedings had an obvious explanation: the awards were for the benefit of public servants engaged in the business of the government parties to the awards. The point of the WR Act providing for successors (etc.) is that, once a transmission has occurred, the original name will be “replaced”, as it were, by the successor’s name for the purpose of binding it. If this were not the case, there would be a vacuum of protection until a new award was negotiated, a situation that s 149(1)(d) is precisely designed to remedy. The subsection is clearly intended to protect workers whose employer’s business is being transmitted, and to ensure the continuity of awards during that process, provided the employer is succeeding to a business which is substantially identical to the one bound by the original awards. In this case the legislative policy and intent is that workers should continue to be protected. It followed, the Judge held, that –

“…the references to the PS Act in the awards are not really conclusive of anything relevant to this case. They may conceivably have been inserted simply to identify the parties to the awards and to enable a differentiation between persons within the APS employed under different enabling legislation. If the statutory or contractual basis for workers’ employment changes, the task of the Court is to look at the facts of the ‘business’ and decide whether there was a ‘transmission’. If so, the employees are entitled to the continued operation of the award, unless there is an order of the Commission to the contrary.”

126               His Honour went on to say that “[t]he ATOF test is not whether the industry or work classification is the same but whether the activities are ‘substantially identical’ with those carried on before”. The precondition for this whole controversy was that the statutory or contractual framework within which those activities occur changed with the business transmitted.

(e)               The Public Service

127               Rejecting EN’s submission that the awards were, in their terms, incapable of operating outside the Australian Public Service, the Judge held that the intention and operation of s 149(1)(d) is that, unless excluded or qualified by order of the Commission, awards operate automatically upon transmission of a business. Once the conditions for transmission have been satisfied (that is, once it is shown that as a matter of fact the business or part of it was transmitted, and that the Commission has made no order bearing on or affecting the automatic transmission of the awards) there is no room for any inquiry into the suitability of the award to the new circumstances. Thus, if the award is not appropriate to the business of the successor for whatever reason, it may have to be varied, but its legal transmission is unaffected. The fact that an award is inconvenient, or not ideally suited to the circumstances of the “transmittee”, is not relevant. Indeed, the purpose of the transmission provisions of the Act is precisely to guard against an employer deciding, of its own accord, that the award conditions, which are part and parcel of the business to which it has succeeded, do not suit its wishes or operating conditions. There is adequate provision for the alteration of the content of an award after transmission where the employer has or perceives difficulties in observing its terms. If EN considered that the award was so APS-specific that it was totally unsuitable to its employees or employment environment, it could “energise” those processes. But as a matter of law, the award transmission is unaffected.

DECLARATORY ORDER MADE AT FIRST INSTANCE

128               Accordingly, his Honour made declaratory orders that the awards and the Agreements bound EN and ENA on and from 1 May 1998.

En’S and ENA’s grounds of appeal

129               EN and ENA rely upon the following grounds in support of their appeal:

(1)               EN and ENA accept that the provision of employment services by DEETYA employees working in CES and EAA may constitute a “business” for the purposes of s 149(1)(d) and s 170MB. However, EN and ENA contend that the business of government conducted by CES/EAA was not the same as the business conducted by EN or ENA from 1 May 1998.

(2)               EN and ENA challenge the approach of the primary Judge to the characterisation of the respective “businesses”, contending that his Honour erred (a) in holding that the term “business” takes its meaning from the activity in which the employer was involved, and from which activity arose the industrial dispute which led to the making of the awards and the agreement; (b) in holding that the question whether an award or an agreement is binding on any “successor (etc.)” is determined by the degree of identity between the activities of the respective entitles concerned (or of their employees); and (c) in applying the reasoning in ATOF.

(3)               EN and ENA contend that his Honour erred in holding that no distinction should be drawn between their respective legal standings.

(4)               EN and ENA contend that the primary Judge erred (a) in holding that from 1 May 1998, they became bound by the awards and the agreement; and (b) in not holding that, as these instruments only bound the Commonwealth in respect of persons employed by it under the PS Act, they did not bind EN or ENA because neither does, or can, employ any person under that Act. EN and ENA further contend that his

Honour should have held that, since these instruments apply in terms only to persons employed in the APS, they do not apply to any of their employees.

THE MINISTER’S GROUNDS OF APPEAL

130               The grounds of the Minister’s challenge are as follows:

(a)                His Honour should have construed s 149(1)(d) in the light of its incidental constitutional foundation – that is, its source is something incidental to the dispute-finding power, enacted in s 101 of the WR Act. So construed, s 149(1)(d) will not permit an award made in settlement of a particular dispute, to have effect in a totally different context, for example, by relating to a different class of employee. Accordingly, his Honour should have held that the awards applied only to persons employed in the APS under the PS Act; and because the employees of EN and ENA are not subject to the PS Act, they are not bound by, or subject to, the awards.

(b)               His Honour should have given the words “successor (etc)” their recognised legal meaning and held that to enable a “business” to be succeeded to (etc), the business itself must be constituted by property (including goodwill) which is capable of disposition, something which did not occur here, so that s 149(1)(d) and s 170MD could not apply in the present circumstances.

CONCLUSIONS ON THE APPEAL

131               It will be convenient to consider both appeals together as they raise similar questions.

132               In order to place the issues in their full statutory context, it will be necessary to refer to the material provisions of the PS Act, including s 81C.

(a)               The material provisions of the PS Act

133               The provisions of the PS Act which appear to be material for present purposes are as follows:

·                    The structure of the Act is: Part 1 (ss 1 – 9B) – Preliminary; Part II (ss 10 – 22) – Composition and Administration of the APS; Part IIA (ss 22A – 23) – Personnel Management; Part III (ss 25 – 82F) – The APS; Part IV (ss 87 – 87ZG) – Officers holding Public Offices or Employed by Public Authorities; Part V (ss 88 – 97) – Miscellaneous.

·                    The chief object of the Act is to constitute a public service for the efficient, equitable and proper conduct, in accordance with sound management practices (including personnel management practices) – “of the public administration of the Australian Government” (s 6 (Part I)) (see Barratt v Howard (2000) 96 FCR 428 at 444).

·                    The Act does not apply to: (a) a person employed in an honorary capacity; or (b) a person remunerated by fees, allowances or commission only (s 8 (Part I)).

·                    The Governor-General may, on the recommendation of the Australian Public Service Management Advisory Board (“the Board”), declare that the Act shall not apply to an officer or employee, or a class of officers or employees (s 8A(1)); and the Board may determine their terms and conditions of employment (excluding rates of payment) (s 8A(3) (Part I)).

·                    The APS is constituted by (a) the Secretaries (including Secretaries to the several Departments) specified in Sch 3; (b) Senior Executive Service officers; (c) “other officers” (defined to mean persons appointed or transferred to the APS, but not including “employees” (s 7(1)); and (d) “employees” (defined to mean persons employed under Div 10 of Part III (s 7(1)) (s 10 (Part II) (see below)).

·                    The Board may require the Secretary of a Department to give the Board a report on personnel management (s 22A(1) (Part IIA)). The Board may make recommendations on the actions that should, or could, be taken to improve personnel management (s 22A(3)). If the Secretary does not concur in or adopt the recommendations, the Secretary shall inform the Minister of his reasons (s 22A(4)).

·                    After giving (amongst others) relevant staff organisations in relation to offices in the Department an opportunity to put their views, the Secretary shall cause to be developed an equal opportunity program (s 22B(3) (Part IIA)). The Board may make recommendations on the action that should, or could, be taken to improve the effectiveness of the program (s 22B(8)). The regulations may provide that this section shall, subject to such modifications (if any) as are prescribed, apply to and in relation to a Commonwealth authority (s 22B(13)). (Emphasis added)

·                    Similar provisions are made in relation to the development, by the Secretary of a Department, of an industrial democracy plan (s 22C(2) and (7)), including a provision that the regulations may provide that the section shall, subject to such modifications (if any) as are prescribed, apply to or in relation to a Commonwealth authority (s 22C(12)). (Emphasis added)

·                    Where a Department is abolished, the Prime Minister may create a substituted office in another Department that has the same classification as a former office in the former Department (s 29(1) (Part III)).

·                    Where, by virtue of administrative arrangements or enactment, a matter is to be dealt with by a different Department, the Prime Minister may abolish a former office and create a substituted office (s 29(2)).

·                    The Secretary of a Department may (and on direction of the Board shall) alter an “approved” classification of an office (s 29A(1) (Part III)).

(An “approved” classification is defined (s 28(1)) as one approved by the Board, or one where a determination under s 82D is in force. Section 82D(1 (Div 10A of Part III) provides that the Board may determine the terms and conditions of employment of officers and employees.)

·                    Unless the Board directs otherwise, where the classification of an office is altered, and the rate, or maximum rate of salary is different from the rate, or maximum rate payable in respect of the office, it becomes vacant and the officer becomes unattached (s 29A(3)).

·                    The Secretary may declare an office in a Department (other than Secretary) to be a part-time office (s 29B(1)) (Div 2B of Part III).

·                    Elaborate provisions are made in Div 4 of Part III for appointments, transfers and promotions, including provision for fixed-term appointments to the Senior Executive Service (s 44), appointments on probation (s 47), re-appointment of retired officers (s 47B) and appeals in respect of a promotion (s 50B). Provision is made (Subdivision C) for disciplinary action (s 61), inquiries into misconduct (s 62), and suspension (s 63B).

·                    Division 6A of Part III deals with forfeiture of office for absence from duty without permission (s 66A).

·                    Division 8 of Part III deals with leave of absence (ss 68E, 70).

·                    Divisions 8B and 8C of Part III deal with retirement and redeployment of SES and other officers.

·                    Division 9A deals with the transfer or reintegration of persons into or out of the APS as follows:

q                   The Commission may, notwithstanding any other provision of the PS Act, appoint to the APS persons who have been involved in the performance of a function certified by the Prime Minister to have been performed by persons appointed or employed under the PS Act (s 81B(1) and (2)).

q                   Transfer of persons where functions are to be performed by a Commonwealth authority is dealt with by s 81C. Where the Prime Minister certifies in writing that a function that has been performed by persons appointed or employed under the PS Act is to be performed by a Commonwealth authority, the Board may declare that specified officers or classes of officers are in the employment of the Commonwealth authority (s 81C(1)). An officer so specified ceases to be an officer, and from that day is employed by the authority (s 81C(2)). For the purposes of facilitating a transfer of persons into the employment of a Commonwealth authority, the authority may (notwithstanding anything in any other law (other than an industrial award)) determine any special terms or conditions of employment that are to apply to the persons (s 81C(2)). (Emphasis added)

·                    An “employee” is defined (s 7(1)) to mean a person employed under Div 10 of Part II (ss 82 – 82BA). Under this division, employees are (relevantly) categorised as continuing, short-term or fixed-term. Specific provision is made for the employment of employees (s 82AA), including matters such as termination (ss 82AH) and deemed retirement (s 82AJ). Special provision is made for deemed re-employment where a Department is abolished, or where, by virtue of administrative re-arrangements, a matter is to be dealt with by a different Department (s 82BA).

·                    Division 10A (ss 82C – 82F) deals with the determination by the Board of terms and conditions of employment of officers and employees. A determination may make provision by reference to other instruments, with or without modification, including an award (s 82E(1)(a)).

·                    A determination is a disallowable instrument (s 82F).

·                    Part IV deals (ss 87 – 87ZCA) with officers holding public offices or employed by public authorities, including, in certain circumstances, persons employed by Commonwealth authorities. Provision is made for a range of matters, including leave, resignation, retirement, reinstatement and re-appointment to the APS in certain circumstances.

·                    Part V deals (ss 88 – 97) with “miscellaneous” matters, including performance of duties of an officer in absence (s 88); conditions of occupancy by an officer or employee of residential premises owned or occupied by the Commonwealth (s 89); protection of persons in respect of work reports on officers or employees (s 89A); provision for the Secretary of a Department to authorise the making of payments to officers and employees who make suggestions which, in the opinion of the Secretary have resulted, or are likely to result, in the promotion or improvement of efficiency or safety (etc) (s 90A); performance of work outside the APS (s 91); and the consequences of an officer’s receiving remuneration in addition to the salary payable under the PS Act (s 91A).

(b)               Analysis of the course of High Court authority on s 149 and its precursors and its significance for present purposes

134               It appears that there is no High court decision squarely on the present point, given especially the invocation here of the operation of s 81C. However, the following propositions may, relevantly, be derived from the course of High Court authority (upon the footing that what was decided in North Western must now be read in the light of the observations made in PP Consultants):

“[O]nce [the rights of employees have] accrued, the employer, regarding [it] in [its] capacity of owner of a particular business, can[not] rid that business of those accrued rights by transferring it, or … rid [itself] of the obligations towards the class of employees by engaging in another house of business of precisely the same nature”. (George Hudson, above, per Isaacs J at 438).

Comment

·                    In my opinion, these observations could not be applied in the present case. For one thing, there was not created here “another [private sector] house of business of precisely the same nature”. On any view, these were public sector arrangements and, although EN and ENA are both Commonwealth authorities, and although there are some similarities in function present, the “house of business” was not “of precisely the same nature” (emphasis added).

·                    For another, the mischief described by Isaacs J is addressed by a specific provision in the form of s 81C of the PS Act, which was utilised here, rather than the general provisions of another statute, in the form of s 149 of the WR Act or its precursors.

·                    It will be recalled that in a public sector context, s 81C(3) squarely addresses the particular mischief adverted to by Isaacs J by providing that the Commonwealth authority may determine any special terms or conditions of employment, notwithstanding any other law except “an industrial award”. In my opinion, this mention of an “award” should be read as a reference to an award binding upon the authority by its own force, that is, directly, as distinct from indirectly or derivatively by virtue of the operation of s 149(1)(d) of the WR Act. Standing on its own, a reference to an award would not, ordinarily, pick up the derivative mechanism of a general provision of another statute in the form of s149. In my view, there is no reason of logic, or experience, to introduce into the operation of the “facilitating” provisions of s 81C(3) the notions described by Isaacs J in George Hudson, a case of a private sector context. Moreover, s 81C(3) operates “notwithstanding anything in any other law”. The award (cl 6.2) provides that it will be read in conjunction with the PS Act. Yet only rarely (e.g. s 22B(13)) does the PS Act contemplate that any of its provisions might (if the regulations so prescribe) apply to an authority “as if it were a Department”.

·                    Specifically, I would not read the general reference to an “award” in s 81C(3) as picking up, via the provision of another Act dealing with the effect upon awards of the transmission (etc.) of a business, an award or agreement of the present kind; that is, instruments which are directed exclusively to the context of employment under the PS Act. To read s 81C(3) otherwise would not, I think, “facilitate” the transfer out, but by obfuscating the employment status of staff, actually impede a smooth transfer, hardly an outcome that Parliament could have contemplated.

·                    The uncertainties are well demonstrated by undertaking the difficult (and undoubtedly contentious) task of ascertaining, in a process of interpretation, what, if any, provisions of the awards and agreement might be applicable in the context of employment by the authority. In this connection, it would not be appropriate for the Court to make an abstract declaration that the award or agreement binds “so far as applicable”. This would not, in my view, be a useful exercise of the discretion to grant declaratory relief. As Barwick CJ and Jacobs J said in Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 (at 307):

“[u]nless the parties are agreed on the consequences which flow from a declaration …, it is generally undesirable that a court should so declare without any orders for consequential relief”. [See also University of New South Wales v Moorhouse (1975) 133 CLR 1 at 9 – 11; Jenkins v NZI Securities Australia Ltd (1994) 124 ALR 605 at 616.]

·                    In the present case, the Union did not seek a qualified declaration of the kind contemplated by Mansfield J in Torrens Transit. The Union’s case here, upheld by the primary Judge, was that they were entitled to a declaration that the award applied without qualification. In my opinion, on any view of the present case, the Union had no entitlement to an abstract, unqualified declaration, in the absence of any claim (as occurred in, e.g., North Western) by an employee of EN or ENA that a particular provision applied in specific circumstances. I should add that, even if some qualifications might have been capable of being framed, I share the reservations as to the utility of that course expressed by Ryan J in CEEEIPPA v Telstra Corp Ltd (1998) 85 IR 318 at 319 – 320.

·                    In Hillman, Starke J (at 265 – 6) at first instance held that there was “identity of the business … [which was] carried on in the same place, by the same staff, doing substantially the same kind of work”, but that there was, nonetheless, no “successor (etc.)” of the business of a party to the dispute or of a party bound by the award”; and the Full High Court agreed.

Comment

·                    It may be that Hillman can be distinguished for present purposes, at least by virtue of the operation here of s 81C(1), a factor not present in Hillman. In my view, s 81C(3) operates to contradict the Union’s claim that s 149(1)(d) of the WR Act picked up the awards as applicable in their entirety. As has been said, s 81C(3) permits an award to operate directly, but not derivatively, or through another statute.

·                    In Shaw, Higgins J (at 536) and Isaacs J (at 537) spoke of a distributive construction (i.e. “reddendo singula singulis”) of a precursor of s 149(1)(d).

Comment

·                    The application of a distributive interpretation of a provision of the kind enacted in s 149(1)(d) is often needed in statutory interpretation (see Bennion, Statutory Interpretation, 3^rd ed at 967 – 968). This would, again, contradict the Union’s claim to a “blanket”, global or universal declaration of right in this instance.

·                    As the majority judgment in PP Consultants noted (par 11), the issue in ATOF was the construction of Union rules. However, the reasoning in ATOF proceeds upon the basis that the “substantial identity” test, in comparing two businesses is appropriate in interpreting a provision which identifies a party by the description “a successor (etc) to the business …”.

Comment

·                    Again, in my view, ATOF is distinguishable for the reason that no question there arose of the operation of a provision of the kind enacted in s 81C of the PS Act. Further, it will be recalled that in ATOF the operation of the transmission clause was read down by reference to several specifics. Moreover, Mason CJ, Gaudron and McHugh JJ relied upon the Commission’s statutory discretion to refuse to make an award at the instance of an organisation with only a peripheral interest in the industry. As well, ATOF involved a claim for prerogative relief sought against the Commission, and not (as here) a claim for a judicial declaration of right framed in absolute terms.

·                    Although the observations in the majority judgment in PP Consultants concerning the “special considerations” in the case of the “business” of government were not, of course, strictly necessary in a private sector context, this Court must give them real weight. As has been seen, Gleeson CJ, Gaudron, McHugh and Gummow JJ there (par 13) having earlier referred to ATOF, stated the test as “whether or not the activities of [a government agency which is engaged in the business of government previously undertaken by another government agency] are substantially identical to the activities or some part of the activities previously undertaken by the latter”.

Comment

·                    These observations do not, in my opinion, justify the grant of a positive declaration in the unqualified terms sought by the Union. For one thing, their Honours’ reference to “some part” of the activities contemplates a distributive exercise of the kind previously mentioned. This, in turn, would raise the complex question of construction of the award, (previously adverted to but never actually addressed in these proceedings in any detail) of the extent (if at all) to which the award is capable of applying to the personnel of EN and ENA, without the benefit of the substratum provided by the operation of the provisions of the PS Act. For another, the High Court was, obviously, not addressing any specific government situation, and in particular, had no reason to have regard to the impact of particular provisions of statutes other than the WR Act, including s 81C of the PS Act, which is a central provision here.

(c)                The results of the appeals

135               It follows, in my view, that the appeals by EN, ENA and the Minister should succeed to the extent that the positive declarations should not have been granted in the Union’s proceedings.

136               However, in their own proceedings, the appellants also claimed negative declarations, either in form or in substance. I have difficulty accepting their claim. Generally speaking, caution should be exercised in granting any negative declaration (see Jenkins v NZI, above; Kawasaki Steel Corporation v Owners (etc) of “Daeyang Honey” (1993) 120 ALR 109 per Gummow J at 114 – 115; cf Messier-Dowty Ltd v Sabena SA (No. 2) [2001] 1 All ER 275). In the present case, once (as I would hold) the Union’s claim fails, it is not necessary to consider whether a negative declaration ought to be made, especially in the absence of any detailed consideration at first instance of the possible distributive construction of the award. The problem is compounded here by the lack of any specific issue, in the absence of any claim by an employee of EN or ENA that a particular provision of the award applied to that employment as if the PS Act applied. These questions must be considered in their own specific context, not as abstractions. In my view, in respect of these appeals, no order should have been made at first instance.

137               Accordingly, I would allow the appeals in part.

ORDERS PROPOSED

138               I propose the following orders:

1.                  Appeals allowed in part.

2.                  Set aside the orders made at first instance. In lieu thereof, make the following orders:

(a)                In matter NG 402 of 1998, order that the application be dismissed.

(b)               In matters NG 181 of 1998 and NG 331 of 1998, make no order on either application.

Associate:

Dated: 15 June 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

RYAN and MADGWICK JJ:

139               There are before the Court two appeals from orders made by Einfeld J on 11 April 2000 declaring that certain awards and a certified agreement was binding on each of the appellants on and from 1 May 1998. His Honour’s reasons for those orders are reported sub nom Employment National Ltd v CPSU, The Community and Public Sector Union (2000) 173 ALR 201. The two appellants in N432 of 2000, Employment National Ltd and Employment National (Administration) Pty Limited were referred to collectively in the reasons for judgment at first instance as “EN”. Except where it is necessary to distinguish between those two appellants, we shall adopt the same expedient. The appellant in appeal N429 of 2000 is hereinafter called “the Minister”.

The relevant legislation.

140               It is accepted that the resolution of the issues between the parties turns on the application of two provisions of the Workplace Relations Act 1996 (“the WR Act”). The first of those is s 149, which provides:

“(1) Subject to any order of the Commission, an award determining an industrial dispute is binding on:

(a) all parties to the industrial dispute who appeared or were represented before the Commission;

(b) all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);

(c) all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;

(d) any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer;

(e) all organisations and persons on whom the award is binding as a common rule; and

(f) all members of organisations bound by the award.

(1A) For the purposes of subsection (1), the Australian Capital Territory Government Service is taken to be the successor to the business of the Australian Capital Territory in relation to the transitional staff within the meaning of the ACT Self-Government (Consequential Provisions) Act 1988.”

141               The second relevant provision, s 170MB, at the relevant time, stipulated:

“(1) If:

(a) an employer is bound by a certified agreement; and

(b) at a later time:

(i) if the application for certification of the agreement stated that it was made under Division 2 - a new employer that is a constitutional corporation or the Commonwealth; or

(ii) if the application stated that it was made under Division 3 - a new employer;

becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned, then, from the later time:

(c) the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(d) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and

(e) a reference in this part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business.

(4)               Subsection (1) does not affect the rights and obligations of the previous employer that arose before the later time.”

The factual background.

142               In 1946 the Commonwealth Employment Service (“the CES”) was established under s 47 of the Re-Establishment and Employment Act 1945 as part of the Commonwealth Department which came to be known as the Department of Employment, Education, Training and Youth Affairs (“the Department”). Section 48 of the Re-Establishment and Employment Act described the functions of the CES as being, in part:

“…to provide services and facilities in relation to employment for the benefit of persons seeking to become employed, to change employment or to engage labour, to provide facilities to assist in bringing about and maintaining a high and stable level of employment throughout the Commonwealth…”

143               Einfeld J made the following findings of fact, at [205], about the actual operations of the CES:

“In its actual operations CES served as a ‘labour exchange’ providing job placement and other services including the registration, screening and vetting of job seekers and the assessment of their needs, expectations and capabilities, the canvassing of employers for suitable vacancies, matching the two in order to place people in employment, and following up on referrals to achieve actual placements. Ongoing monitoring of placements also occurred.

The functions of CES also included the provision of ‘case management’ for those who were considered to be ‘long term’ unemployed, and for whom a structured or managed program was felt necessary in order to increase the prospect of finding employment for them. CES would sometimes contract with non-departmental bodies to provide job seekers with specific services such as short training courses. This element of its activities was referred to as the ‘labour market program’.

CES was administered according to area and there were at one time over 300 branches around Australia. Its services were free to the public, except for certain ‘advanced’ services offered to employers, such as ‘CES Plus’, for which a fee was charged. The employees of CES were public servants employed under the PS Act. For the most part, CES consisted of ‘employment officers’ who operated the ‘labour exchange’ system.”

144               The Employment Services Act 1994 (“the ES Act”) was enacted to provide employment services free of charge to job seekers. Amongst other things, the ES Act established Employment Assistance Australia (“EAA”). The effect of the ES Act has been summarised by the learned primary Judge, at [206], in these terms:

“By section 18 EAA was established, within the department, as a ‘sister’ organisation to CES, to take over the individual ‘case management’ of longer-term unemployed persons. Section 37(1) of the ES Act defined the provision of case management services as “assisting a participant in the case management system to obtain sustainable employment”. In the fulfilment of this task EAA had the services of up to 250 external contracted ‘case managers’, operating on a ‘fee for service’ basis. Section 68 of the ES Act established the Employment Services Regulatory Authority (ESRA) to regulate EAA’s ‘case management’ system. The scheme provided that ESRA would award tenders for the services on behalf of the Commonwealth to organisations it accredited for the purpose.

Participation in EAA’s case management system was only open to persons registered with CES and referred by it to the system according to guidelines provided in Part 4 of the ES Act. The system required each referred unemployed person to enter into a ‘Case Management Activity Agreement’ with a particular case manager. In general, Part 4 of the ES Act regulated the entire provision of the services established or consolidated under it. From the evidence presented to the Court, it is evident that the contracted services included amongst other things assessing each participant’s experience, abilities, goals and needs, identifying impairments to long term employment, providing information, advice and counselling, managing the signed Activity Agreement, surveying and liaising with potential employers, and generally monitoring the participant’s progress after employment was obtained.”

145               In August 1996, the Government indicated that it proposed to implement a change in the way in which employment services were to be delivered by “outsourcing” the provision of these services to bodies which were to tender for the right to obtain employment for job seekers in return for a fee to be paid by the Commonwealth. Einfeld J observed, at [207], in respect of the accompanying Ministerial Statement:

“The government was to retain some services, and all others were to be contracted out to the ‘Job Network’ of employment service providers, of which EN/ENA were to be established by the Commonwealth as one. The overall theme of the Ministerial Statement was that the incumbent system was to be transformed into a competitive market for employment placement services, with a focus on incentives to attain actual outcomes in the form of persons placed in sustainable employment. At page 17 of the Ministerial Statement, the Minister explained:

The Government has concluded that the public sector should continue to provide, through the service delivery agency, a uniform national service for the registration of job seekers; for the assessment of job seekers’ eligibility for employment assistance; for referral of clients to assistance in the employment placement market; and for administering the activity test and enforcing compliance with conditions of assistance. For client convenience, the agency will also provide access to vacancy information, self-help facilities and on the spot referrals to employers and employment placement enterprises (EPEs). With these exceptions, however, all other employment placement functions will be contracted out to [EPEs] including the corporatised EPE [that is, EN], in a fully contestable market for employment placement services.

This “service delivery agency” became Centrelink, created on 1 July 1997 pursuant to the Commonwealth Services Delivery Agency Act 1997 within the Department of Social Security (DSS). It is evident that it performs some of the functions previously carried out by CES, most notably the initial registration of unemployed persons, a function that it began in October/November 1997. Centrelink also makes available at some of its branches a ‘self-help’ computerised searchable database of employment opportunities that it is made aware of.

The Ministerial Statement described Centrelink as integrating some of the “public contact services” of both CES and EAA. It was conceived of as the ‘first port of call’ and a ‘one-stop shop’ to perform functions of the regional offices of DSS, and to provide the public with access to the employment scheme. Its employees are employed under the PS Act. In addition to its function as a place of registration for job seekers and a source of referral for these persons to Job Network entities such as EN, it administers the unemployment benefits scheme, which is a distinct social security function. Notwithstanding the creation of Centrelink, CES/EAA continued to provide their ‘labour exchange’ and ‘case management’ services until 30 April 1998.”

146               The 1996 Ministerial Statement also noted that many staff employed by CES and EAA would eventually become employees of “a new public employment placement enterprise” [EN] and other CES staff would be absorbed into the agency, Centrelink, which was to take over the delivery of services formerly provided by the Department of Social Security. Yet other CES staff were to remain with the Department. The following findings of fact have been made, at [208], about the respective appellants in proceedings numbered 432 of 2000:

“EN was incorporated in the Australian Capital Territory on 7 August 1997 under the name ‘Public Employment Placement Enterprise Limited’. It is wholly owned by the Commonwealth, which provided its start-up capital. The shareholders hold all the company’s shares as representatives of the Commonwealth. It employs one person, a Managing Director.

ENA is a corporation under the Corporations Law and a wholly owned subsidiary of EN, employing over 1000 persons. ENA was formed in September 1997 to provide services and employees to EN in order to enable EN to operate its business, which is essentially labour exchange services in accordance with what became known as the “FLEX” scheme eventually put into operation. For the period 1 December 1997 to 30 April 1998 (the transitional period) the CES/EAA were under the direct management of EN, with staff and services provided by ENA.

147               ENA undertook to employ the staff necessary to enable EN to fulfil its contractual obligations to provide certain services to the Commonwealth. Accordingly, ENA offered employment to persons then employed within the Department who were told that “the ‘core activity’ of ENA’s ‘employment consultants’, as they were to be called, was to be ‘job matching, screening, and suitability assessments, as well as routine administrative activities associated with vacancies, placement and recruitment’.

148               In addition to EN, as the learned primary Judge noted, following a competitive tender process some 310 other EPEs were awarded contracts each of about 18 months duration to provide services. As his Honour found, also at [208], it was contemplated that at the expiration of the original contract, new tenders would be called for and that “the department would monitor the performance of the EPEs under these contracts so that breaches of its code of conduct could result in cancellation of the contract. Payment would be in accordance with the contract.”

Did the activities formerly carried on by the Department constitute a “business” for the purposes of s 149(1)(d)?

149               This was the first question identified as requiring resolution at first instance and Einfeld J concluded:

“It follows that the provision of the relevant employment services by employees of CES/EAA prior to 1 May 1998 constituted a ‘business’ capable of transmission to a successor employer within the meaning of section 149(1)(d). I would add that whilst on the facts, and on existing authority, the description and characterisation of the actual activities of CES/EAA constitute a ‘business’ of their own accord, such a factual inquiry may actually be superfluous since the proper construction of the statutory provision requires that the term ‘business’ take its meaning from the activity in which the employer was involved and from which the industrial dispute which led to the awards and the agreement arose: see North Western at 157. The result of this exercise for this case speaks for itself.”

150               His Honour reached that conclusion by following the approach approved by a Full Court of this Court in North Western Health Care Network v Health Services Union of Australia (1999) 164 ALR 147 (“North Western”) which, in turn, had regarded the question as illuminated by the reasoning of the High Court in Re Australian Industrial Relations Commission; ex parte Australian Transport Officers Federation (1990) 171 CLR 216 [“the ATOF Case”] where it was observed, at 226:

“The reference to the departmental activities standing outside the world of ‘productive industry and organized business’ ... should not be understood as a statement that the departmental activities did not constitute a business within the meaning of the eligibility rule. Of all words, the word ‘business’ is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 C.L.R. 355, at p. 378-379. Its meaning depends upon its context. It is common and apt to speak of ‘the business of government’: see, for example, Conway v Rimmer [1968] A.C. 910, at p.952.”

151               The learned primary Judge rejected an argument advanced on behalf of the Minister that the activities of the Commonwealth formerly carried on by CES and EAA were not a “business” that could be the subject of transmission or succession since they had none of the commercial features that were ordinarily characteristic of a “business”. He noted that the concept of “industrial dispute” was wide enough to embrace governmental activities irrespective of whether they had a commercial aspect, although not all activities of government were capable of characterisation as “business”.

152               The judgment at first instance was published before the High Court gave judgment in PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 206 (“PP Consultants”) and before the recent judgment of a Full Court of this Court in Stellar Call Centres Pty Ltd v CEPU [2001] FCA 106, which applied PP Consultants. On the hearing of the appeal, Counsel for EN referred to the joint judgment of Gleeson CJ, Gaudron, McHugh and Gummow JJ in PP Consultants where it was observed, at pars 13-15:

“Whilst the notions of "profit" and "commercial enterprise" will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business [See eg Smith v Anderson (1880) 15 CH D 247 at 258 per Jessel MR; White v FCT (1968) 120 CLR 191 at 216 per Barwick CJ; Thomas v FCT (1972) 46 ALJR 397 at 401 per Walsh J; Ferguson v FCT (1979) 26 ALR 307 at 311 per Bowen CJ and Franki J, 318-19 per Fisher J; cf Tweddle v FCT (1942) 180 CLR 1 at 6 per Williams J], they play little, if any, role in identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word "business" takes on a special or particular meaning in the expression "the business of government". It is not because, as a matter of ordinary language, "business" means or includes activities undertaken in the course of business.

The question whether one person has taken over or succeeded to the business or part of the business of another is a mixed question of fact and law. For this reason and, also, because "business" is a chameleon-like word, it is not possible to formulate any general test to ascertain whether, for the purposes of s 149(1)(d) of the Act, one employer has succeeded to the business or part of the business of another. Even so it is possible to indicate the manner in which that question should generally be approached, at least when a non-government employer succeeds to the commercial activities of another non-government employer. As already indicated, special considerations apply when one government agency succeeds to the activities of another. And there may well be other considerations where a government contracts with a non-government body for the performance of functions previously carried out by a government authority.

As a general rule, the question whether a non-government employer who has taken over the commercial activities of another non-government employer has succeeded to the business or part of the business of that other employer will require the identification or characterisation of the business or the relevant part of the business of the first employer, as a first step. The second step is the identification of the character of the transferred business activities in the hands of the new employer. The final step is to compare the two. If, in substance, they bear the same character, then it will usually be the case that the new employer has succeeded to the business or part of the business of the previous employer.”

153               It was submitted on behalf of the Minister on the hearing of the appeal that the High Court in PP Consultants held that whether a particular government agency is engaged in the business of government previously undertaken by another government agency is to be determined by examining whether the activities of the two agencies are substantially identical. In the same context, it was acknowledged that the High Court had indicated that other considerations may well apply where a government contracts with a non-government body for the performance of functions previously carried out by a government authority.

154               On the appeal, it was submitted on behalf of the respondent CPSU that both EN and ENA are government agencies. Whether they sustain that character is, it was submitted, a question of fact to be resolved in the light of principles like that articulated by the whole High Court in Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219, where it was observed, at 230:

“Once it is accepted that the Constitution refers to the Commonwealth and the States as organizations or institutions of government in accordance with the conceptions of ordinary life, it must follow that these references are wide enough to denote a corporation which is an agency or instrumentality of the Commonwealth or a State as the case may be. The activities of government are carried on not only through the departments of government but also through corporations which are agencies or instrumentalities of government. Such activities have, since the nineteenth century, included the supply on commercial terms of certain types of goods and services by government owned and controlled instrumentalities with independent corporate personalities. Railways are a notable example. As early as 1906, in The Federated Amalgamated Government Railway and Tramway Service Association v. The New South Wales Railway Traffic Employees Association ("the Railway Servants Case") (1906) 4 CLR 488, this Court recognized that the railway undertakings of the colonial governments carried on by incorporated Railway Commissioners were instrumentalities of those governments, ibid., per Griffith C.J. at p 535, Likewise, banking activities were conducted by corporations under legislation enacted by the colonial legislatures before federation and the Constitution expressly exempted "State banking", i.e., "banks established and conducted by a State or by an authority established under State law and representing a State": Melbourne Corporation v. The Commonwealth (1947) 74 CLR 31, per Latham C.J. at p 52, from the reach of the legislative power with respect to banking conferred by s.51(xiii).”

155               In our view, as conducted by CES and EAA, the labour exchange and case management activities carried on by CES and the case management activities of EAA were part of the ‘business of government’ in the sense explained in Deputy Commissioner of Taxation v State Bank (NSW) and as the phrase was used by the High Court in par 13 of the joint judgment in PP Consultants quoted above. A significant part of those activities, of the order of 43 per cent, has been taken over by EN, and the residue has been distributed between the other 310 or so EPEs.

156               We incline to the view that EN is “another government agency” within the meaning of that expression in par 14 of the joint judgment in PP Consultants. In par 10 of the same judgment it was observed that in the ATOF Case:

“the question was whether, for the purposes of a union eligibility rule, a statutory body, the Roads and Traffic Authority of New South Wales (the RTA) had succeeded to the business of a government authority, the Commissioner for Motor Transport (New South Wales) (the CMT). It was noted in that case; that "[i]t is common and apt to speak of 'the business of government'" [(1990) 171 CLR 216 at 226; 96 ALR 513 at 519, referring to Conway v Rimmer [1968] AC 910 at 952 per Lord Reid] and, in that context, it was held that the question whether the RTA had succeeded to the business of the CMT was to be answered by determining whether there was "a substantial identity between the old activities [of the CMT] and those now carried on by the RTA which correspond with the old activities" [(1990) 171 CLR 216 at 230; 96 ALR 513 at 522].”

157               We consider that CES and EAA were “government authorities” in the sense used in that passage and that it matters not that EN is not a “statutory body” identical to the RTA in the sense of having been established pursuant to a statute specifically framed for the purpose but has been incorporated under the general Corporations Law. The Commonwealth is legally or beneficially entitled to all the issued shares in EN which are not transferable except by or with the consent of the Minister for the time being responsible for Employment, Education, Training and Youth Affairs. New directors may only be appointed by the Minister. It is true, as Counsel for EN submitted, that the control which the Commonwealth is entitled to exercise over EN is grounded in contract and not in the right of the Crown pursuant to statute. Incorporation pursuant to a specific statute may facilitate the adoption of features which tend to the conclusion that the corporation is one through which the government carries on business. That conclusion was reached in State Bank of New South Wales v Commonwealth Savings Bank of Australia (1986) 161 CLR 639 to which we were referred by Counsel for EN. However, the fact that it might have been, but was not, incorporated pursuant to its own specific statute does not, in our opinion entail that EN is any less a “government agency” in the sense used in par 13 of the joint judgment in PP Consultants.

158               Even if we are wrong in the view just expressed and EN is to be regarded as a “non-government body” which has contracted with the government “for the performance of functions previously carried out by a government authority”, it is clear from par 14 of the joint judgment in PP Consultants from which the words just quoted have been taken, that “there may well be other considerations” than those which govern the application of s 149(1)(d) when a non-government employer succeeds to the commercial activities of another non-government employer”. That possible application of other considerations, in our view, warrants an approach not circumscribed by concepts like “profit”, “competition” and “goodwill” as applicable to purely private commercial enterprises.

159               We consider that the preferable approach in the present context, and one left open by PP Consultants, is to identify the activities formerly undertaken by CES and EAA as part of the business of government and ascertain whether those activities are substantially identical to the activities or some part of the activities of EN.

160               As found by the learned primary Judge, the essential activities of CES after it was established were the conduct of a “labour exchange” and the administration of a “labour market program” in which job seekers were provided with specific services like short training courses. After EAA was established in 1994 it took over from CES that part of the ‘labour market program’ which involved the individual case management of longer term unemployed persons.

161               In our view, the activities which we have just described were substantially identical to the activities now undertaken by EN. The points of difference to which Counsel for EN have pointed either do not touch the industrial activities of CES and EAA on the one hand and EN on the other or, at best, are peripheral to those activities. Considerations such as the statutes under which the different entities have been established, the different mechanisms for their control and the presence or absence of immunity from criminal or civil liability or from being wound up upon insolvency bear on the inherent nature or constitution of the various entities not on the characterisation of their activities. At their highest, they bear only on the question, discussed above, of whether EN is a “government agency” or a “non-government employer.”

162               Equally, the fact that EN competes, to an extent, in a market with the other 310 or so EPEs is not intrinsic to the character of its activities compared with those of CES and EAA. It goes rather to the environment in which the activities are performed. Similarly, the fact that EN is intended to make a “profit” by keeping the costs of the services it provides to the Commonwealth below the fees which the Commonwealth pays for those services does not qualitatively distinguish EN’s services from those formerly provided by CES and EAA which, presumably, were funded out of Consolidated Revenue. A qualitative difference might possibly have been demonstrated if EN, like a private employment agency or personnel consultant, charged a fee to the job seekers or employers to whom its activities are directed. However, it seems to be undisputed that, as indicated in the 1996 Ministerial Statement, EN as “a new public employment placement enterprise”, like the other EPEs, performs the relevant activities in return for a fee paid by the Commonwealth.

163               To rely, as a point of difference between the activities of a former employer and those of the new employer, on the industrial prescription applicable to the employees of each is, we consider, to beg the question raised by s 149(1)(d). Accordingly, we derive no assistance in resolving whether there is the requisite identity of activities between CES/EAA and EN from the fact that only employees of the former were employed under the Public Service Act 1922. We are fortified in this conclusion by the effect of s 81C of that Act which is discussed below.

164               Mr Trew QC who appeared with Mr Gelbart, for EN, argued that, in reality, a single approach is ordained by the ATOF Case and PP Consultants, namely to ask whether the part of the business had the same character in the hands of the first employer as in the hands of the new employer, and that, in the case of government agencies, that approach is satisfied if the relevant activities of the two agencies are substantially identical. This argument has some logical attraction. However, it is to be remembered that the joint judgment of the High Court in PP Consultants denied the possibility of “formulating any general test” and limited its formulation of the test to “the manner in which [the] question should generally be approached” (emphasis added) in cases where two private sector employers are involved. Where there is a government agency involved, the “character” that its business bears is, or may be, less capable of identification than the character of the business of many private concerns, or may only be able to be characterised as “the business of government”.

165               In any case, no different result is reached if the test is whether the character of the employers’ activities is identical, rather than substantially identical. The relevant part of the business was and is the provision of free, public employment services, paid for by the Commonwealth.

Is EN a successor assignee or transmittee?

166               It was contended on behalf of the Minister that a succession, assignment or transmission contemplated by s 149 requires some legal nexus between the first, or original, employer and the presumptive transmittee. Reference was made to the observations of the New South Wales Industrial Commission in Bransgrove v Ward and Syred (1931) AR 272 at 277:

“To constitute successorship, there must be some definite legal nexus or privity between a respondent to the Federal award who is the predecessor and a successor who then, by virtue of the Commonwealth statute, becomes bound by the Award. The existence of that nexus or privity must be evidenced either by direct proof of a transaction or by facts from which the conclusion may be drawn of some transference of right to the business from the predecessor to the successor.”

167               That proposition seems to have been qualified to an extent by the observation in par 14 of the joint judgment in PP Consultants that;

“The question whether one person has taken over or succeeded to the business or part of the business of another is a mixed question of fact and law. ......... it is not possible to formulate any general test to ascertain whether, for the purposes of s 149(1)(d) of the Act, one employer has succeeded to the business or part of the business of another.”

168               That qualification, we believe, precludes us from confining succession, transmission or assignment to accepted legal categories like sale, assignment, bequest or statutory vesting and from limiting the statutory concepts by reference to traditional notions like privity, developed in the law of contract or real or personal property. That was the view taken by R D Nicholson J (with whom Spender and Madgwick JJ agreed) in North Western where his Honour said, at [64] and [68]:

“I also do not agree that the primary judge fell into error because he looked at what was occurring before contracting out and contrasted it with what was occurring after contracting out without examining the nature of the nexus between the two stages. Once it is accepted that the reference to “the business” in s 149(1)(d) has the wide reference which the primary judge found, it is not necessary to search for some legal form of succession, assignment, transfer, corporate acquisition or takeover. What is necessary is to determine as a question of fact whether “the business” understood in the wide sense so found has been transmitted to other hands. That does not require a search for some legal mechanism as a nexus between the pre and post transmission stage.

......

The findings established that the same patients become the responsibility of the networks; the medical records and stock were transferred; leased assets were assigned; and staff were transferred. While the State retained control over funding and audit that was but the consequence of it having transferred the responsibility for the provision of the relevant mental health services so that it was now required to pay for the delivery of such services. What was involved was a transmission of the core of the relevant services not, as in Crosilla or Kelman v Care Contract Services (1995) ICR 260, a peripheral activity.”

169               The issue of succession, transmission or assignment, as distinct from the issue concerning “part of a business” received little express attention in PP Consultants. However, it is apparent from the primacy accorded (at par 15) to the “before and after” comparison and from the use of the lay terms “taken over” (at par 14) and “disposed of” (at par 19) in considering whether anything had passed from the first employer, that the joint judgment implies an aversion from any narrow or technical reading of the phrase “successor, assignee or transmittee”. Neither did Callinan J appear attracted to a technical approach: see pars 29, 39 – 43.

170               At one end of the spectrum of circumstances to which ss 149(1) and 170MB can arguably apply is the case where the former employer who was a party to the industrial dispute, simply vacates the field of, or ceases to participate in, the activities to which that dispute related. The mere fact that one or more new employers adventitiously enter the area or begin to engage in the same or substantially similar activities would not, it seems reasonably clear, constitute the new employers as successors, assignees or transmittees of the former employer. What is required is some conduct or connection touching employment in the relevant activity from which can be imputed a sufficient relationship between the former employer and the new employer or employers.

171               It would be undesirable to attempt, in the context of the present appeal, to compile an exhaustive catalogue of the circumstances which may combine in a given case to constitute a succession, transmission or assignment for the purposes of s 149(1) or s 170MB. It is sufficient to record our satisfaction that at least by the following actions in combination, the Commonwealth clearly created a relationship between the former employer, CES/EAA, and the new employer, EN, of a kind which indisputably satisfies the test adumbrated in [170] of these reasons.

172               In the first place, the Commonwealth instituted a competitive tender process which ensured that EN as “a new public employment placement agency” would take over a substantial number of “clients” and acquire an estimated share of the potential pool of such persons formerly serviced by CES/EAA.

173               Secondly, the Commonwealth has transferred to EN leasehold property, equipment and other assets formerly controlled and used in the same way by CES/EAA. As well as making those assets available for the exclusive use of EN, the Commonwealth has given it, in common with the other 310 EPEs, access to certain intellectual property, namely the National Vacancy Database, which, since 1 May 1998 has been operated by the Department and has apparently been built upon a similar database to which, before 1 December 1997, CES had exclusive access.

174               Of particular significance is the fact that the Commonwealth facilitated an occurrence described by the learned primary Judge in these terms:

“When operations commenced, ENA had approximately 1200 employees, about 1100 of whom had been working in or for CES. Just over 700 of these were departmental employees while 400 had been temporary departmental employees. They all performed substantially the same tasks as they had done previously.”

175               Part of that facilitation was the issue by the Prime Minister of a certificate under s 81C of the Public Service Act in these terms:

“Supervisory, clerical and administrative support functions in support of employment services, that have been performed by persons appointed or employed under the Act in the [department] are to be performed by [ENA], a Commonwealth authority within the meaning of sub section 7(1) of the Act.”

176               Section 81C of the Public Service Act provides:

“(1) Where the Prime Minister certifies in writing that a function that has been performed by persons appointed or employed under this Act is to be performed by a Commonwealth authority, the Board may, by declaration in writing published in the "Gazette", declare that specified officers or classes of officers are in the employment of the Commonwealth authority.

(2) An officer specified, or included in a class of officers specified, in declaration under subsection (1):

(a) on the day specified in the declaration for the purpose of this subsection, ceases to be an officer; and

(b) from and including that day, is employed by the Commonwealth authority specified in the declaration.

(5)               For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons.”

177               As the learned primary Judge found; “that certificate was issued in response to a request by the responsible Minister in a letter to the Prime Minister dated 13 February 1998 which recited that one of the reforms that required the certification was “the creation of [EN] as a successor to [CES]”.

Are the awards formerly binding on the CES and EAA incapable of applying to employees of EN or ENA?

178               It was next submitted on behalf of the appellant Minister that s 149(1) of the WR Act was incapable of creating an entitlement in employees of a successor to a government business to wages and conditions of employment prescribed by awards which could not, as a matter of construction, apply to those employees. The relevant awards in the present case were:

·          Australian Public Service, General Employment Conditions Award 1995 (“GECA”);

·          Australian Public Service, Administrative Services Officers (Salaries and Specific Conditions) Award 1995 (“the ASOs Award”);

·          Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995; and

·          Australian Public Service, Senior Executive Service (Salaries and Specific Conditions Award 1995.

179               It was said that each of those awards was confined in its application to those employees employed pursuant to the provisions of the Public Service Act. In a related way, it was contended that the foundational dispute in settlement of which the awards had been made had been confined in its ambit to one between the CPSU and the Commonwealth as the employer of persons employed pursuant to the Public Service Act.

180               Counsel for the appellant Minister pointed to the fact that the Awards listed in [173] above (“the Awards”) had been made in settlement of an industrial dispute between the CPSU and the Commonwealth as the employer of persons pursuant to the Public Service Act. That was said to explain the statement under the sub-heading “Employers” in sub-cl 5.2 of the “Parties Bound” clause of GECA that;

“This award will apply and be binding upon all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the Act.”

181               In cl 3.1 of GECA, “Act” is defined to mean “the Public Service Act 1922 as amended from time to time.” On behalf of the Minister it was also pointed out that certain provisions in GECA were incapable of applying to persons other than those employed under the Public Service Act. Accordingly, so the submission went, the proviso to s 149 that the binding affect of any award is “subject to any order of the Commission” has been satisfied in respect of GECA, amongst other awards, because its application has been limited by order of the Commission to persons employed under the Public Service Act.

182               In aid of this argument, Mr Robertson SC, who appeared with Mr Bennett for the Minister, sought to distinguish North Western on the ground that the awards in that case were expressed to be binding “in respect of all employees of the Department of Health and Community Services (Victoria) eligible to be members of .....[relevant unions].” The Awards, by contrast, were expressed to be binding on “all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the Act.” (ie. the Public Service Act).

183               The CPSU’s response to these arguments is that they do not preclude awards like those in question from applying by force of s 149(1) to employees of a transmittee insofar as those awards are capable of applying to those employees. If they are incapable of so applying, the Awards are to that extent unenforceable but that does not mean that they are deprived of the pro tanto application preserved by s 149(1)(d) of the WR Act. Support for that view is said to be derived from the fact that, in the form in which it appeared in the Industrial Relations Act 1988 (Act No 86 of 1988), s 149 differed from the corresponding provision, s 61, of the Conciliation and Arbitration Act 1904 by the presence, at the beginning of the prefatory words of the section, of the expression “Subject to any order of the Commission ....”. At the same time there were inserted in par (d) of what became s 149(1) the words “or part of the business .....”. By expressly stipulating that the binding effect of an award was “subject to any order of the Commission”, the new section, it was submitted on behalf of the CPSU, effectively removed the possibility that limitations on the binding effect of a particular award, including its effect on a presumptive assignee or transmittee of the business or part of the business of a party to the dispute, might arise by implication from the terms of the award or the circumstances in which it was made. In the event, it is unnecessary to do more than note this submission because Counsel for each of the Minister and EN have disavowed any contention that any of the Awards contains a provision amounting to a contrary order of the kind contemplated by the prefatory words in s 149(1).

184               The CPSU sought to meet the appellants’ contention that the foundational dispute had been confined to employees covered by the Public Service Act by pointing out that the finding of dispute made on 24 November 1992 recorded:

“1. That an industrial dispute exists between the Public Sector, Professional, Technical, Communications, Aviation and Broadcasting Union and the employers named in Annexure “A” to this finding of dispute.

2. The matters in dispute are set out in a letter of demand dated 18 September 1992 and a log of claims attached thereto.

3.                  The dispute extends beyond the limits of any one state of Australia.”

185               The employers named in Annexure “A” to the finding of dispute included eighteen Ministers of the Crown in right of the Commonwealth, parliamentary officers and chairpersons, managing directors and directors of certain statutory bodies as well as the Chief Justice of the High Court and the Chief Minister of the “ACT Government”. In the log of claims itself, the word “employee” was defined to mean “a person who:

(i) is a member of the union,

(ii) is eligible to be a member of the union, or

(iii)             becomes eligible to be a member of the union by an order of the Australian Industrial Relations Commission.”

186               The first sentence of the standard form letter addressed to each employer served with the log recited:

“The Australian Public Sector, Professional and Broadcasting Union, Australian Government Employment (PSU), on behalf of its members and persons eligible to be members now engaged in employment or hereafter to be engaged in employment in your department/agency, claims that the employment of such persons and each of them shall be under and subject to the provisions and upon the terms and conditions set out in the attached Schedule A and that all payments, allowances and benefits shall in the circumstances and under the terms and conditions set forth in the said Schedule A be made and accorded to each and all such persons.”

187               In the light of the conclusions reached on the issues discussed above, this question ultimately turns on whether the Awards evince an intention so to limit the obligations of the Commonwealth, as represented by the Ministers, as to indicate that the Awards can or should, exceptionally in the light of ss 149 and 170MB, have no operation following a transmission or assignment of part of the business of the Commonwealth to a corporation or corporations beneficially owned and controlled by the Commonwealth.

188               In favour of an affirmative answer, the following may be said:

·                    The Awards in terms bind the Minister only “in respect of employees [including, by virtue of interpretation clauses in the Awards, officers] under the [Public Service] Act”;

·                    That Act and other legislation (e.g. the Long Service Leave (Commonwealth Employees) Act 1976 (“the LSL Act”) and the Superannuation Act 1976 (“the Superannuation Act”)) provided, especially for officers, but also to an extent for employees, a specific regime of employment rights and responsibilities dissimilar in some important respects from those commonly found in employment contracts to which the Commonwealth is not directly a party;

·                    Each of the Awards is expressed to form “part of a set of integrated paid rates awards”. That is, the employees would ordinarily not expect to receive benefits from the Commonwealth in excess of those provided by the Awards (and relevant legislation). The position may not be the same in the new “corporatised” environment; and

·                    Section 149(1)(d) does not provide that employees shall continue, after a transmission, to enjoy the same remuneration and conditions prescribed by an award as binding on a former employer. What the section says is that the “award … is binding on a [transmittee etc] of the business or part of the business”. But the Awards never did regulate the salaries and conditions of persons not appointed or employed under the Public Service Act. Neither do they, after the transmission.

189               However, there are countervailing considerations which, in our view, outweigh these matters.

190               As indicated above, the Prime Ministerial certificate contemplated by s 81C(1) was duly given (see [174] above). The declaration of the [successor of the Public Service] Board also contemplated by subs (1) was likewise given: on 1 May 1998 the Board’s successor declared that the relevant officers “are in the employment of [ENA]” with effect from that day.

191               While s 81C may be said to have various purposes, subs (3) seems to contemplate that the receiving authority would, or at least may, make its determination before the instantaneous transfer effected by subs (2). This appears to indicate an assumption and intention that the transferred officers should continue to have the protection of any pre-transfer public service award as well as, in the light of s 149(1)(d), that of any private sector award to which the receiving authority might be subject (although s 81C would normally apply to a new authority, as yet without any (or many) employees and unlikely to be covered by an existing award). Such an intention is conformable with Division 3 (“Rights of certain former officers”) of Part IV of the Public Service Act. That Division has the evident purpose, in respect of s 81C officers (see s 87K(2A)), of preserving certain of their rights accrued whilst in the Service, for example long service leave (s 87L), and a right to be transferred or promoted to a Public Service position. Moreover, it was thought necessary in s 81C(3) specifically to empower the authority to determine only “special” terms or conditions for the single limited purpose of facilitating the transfer. Plainly, the assumption and intendment were that the ordinary operation of an award would not be affected. Such operation is prescribed by s 149, not only in relation to succession assignment or transmission situations, but generally. In general, fair dealing with, and a considerable measure of protection of the existing entitlements of, officers transferred out of the Public Service under s 81C but still, so to speak, working within the Commonwealth’s direct sphere of influence, were among the legislative purposes.

192               This analysis is also consistent with the general history of the determination of the employment entitlements and obligations of officers and employees of the Commonwealth Public Service. Some of these have been prescribed by statutory provisions, some by delegated legislation and some by industrial awards. However, over time, both the scope of award (as distinct from non-award) regulation and the ease with which award prescriptions might override provisions of the Public Service Act have exhibited a marked tendency to increase.

193               So far as is presently relevant s 81C(3) was intended to provide a means of fair, just and effective preservation, or appropriate adaptation, of the non-award rights and liabilities of officers and employees upon their transfer from the public service proper to a Commonwealth authority. S 81C(3) was not intended to be a means of displacing the pre-transfer award entitlements of officers and employees, notwithstanding that the availability of those rights against the authority might depend upon a succession mechanism (like that embodied in s 149) in the law setting up the award system, since awards are creatures of statute.

194               There was no need for the Parliament to provide as it did by s 81C in order to enable orderly preservation and adaptation of award entitlements. The terms of the Workplace Relations Act and its predecessors, among other things, have given broad powers to the Australian Industrial Relations Commission, including the ability to vary awards. Moreover, s 149 was itself sufficient to preserve existing award entitlement against the transferee authority .

195               Further, it is very unlikely that Parliament would have intended by s 81C to deprive officers and employees (and their registered organisations) of such award rights as would or might otherwise be preserved for them by s 149 without expressly and clearly saying so. Such a deprivation would have reflected an important legislative policy and one philosophically apparently at odds with the preservative approach to officers’ and employees’ rights adopted by the Public Service Act generally: see, for example, the references in [191] above.

196               The Awards are expressed to be “read in conjunction with the [Public Service] Act and regulations …, determinations and terms and conditions made thereunder from time to time” and “[w]here the Act, its regulations, determinations and terms and conditions made thereunder are inconsistent with the provisions of [the awards], the latter will prevail”. (See e.g. cl 6.2 of the GECA) Thus if the awards were inconsistent with any non-award action taken pursuant to s 81C(3) the Awards would prevail. That accords with the specific contemplation of s 121 of the Workplace Relations Act.

197               This is a case where no relevant pre-transmission employee was anything other than an officer or employee under the Public Service Act. The use of the phrase “in respect of employees under the Act” in the Awards was therefore not to mark out some classes of “employees” directly engaged by the Commonwealth from others. The point was to ensure that these awards did not reach to the particular,named “Commonwealth agencies” which were also parties to the underlying dispute, in part settlement of which the subject awards were made. Hence, it is fair to say that, in the present context, that phrase had no work at all to do. It was, in context, no more than a way of saying that, in respect of direct engagement by the Commonwealth, the Awards should extend to all officers and employees. Moreover, it seems highly unlikely that anyone connected with the making of the awards - the Commission, any of the Ministers, or (quite certainly) the appellant CPSU – would have had any interest in so delimiting the binding force of each award as to deny officers and employees the benefit of s 149(1)(d).

198               The Commonwealth’s activities were and are very diverse. As history shows, the policies and views of Parliament and governments are likely, from time to time, to fluctuate as to whether particular activities are best carried out by a corps of directly employed public servants, by a Commonwealth statutory authority, by a Commonwealth owned or controlled corporation or entirely by the private sector. Sections 149(1)(d) and 170MB are, in principle, available to protect the continuity of an industrial settlement and employees’ rights in every other transmission of business to which a federal award or agreement applies. It would be odd if the vagaries of the wording of an “incidence” or “parties bound” clause of an award, clearly enough aimed at excluding other particular employers from its scope, were to be able, inadvertently to create industrial confusion or uncertainty in respect of such a large body of employees, virtually any of whom might find the Commonwealth’s relevant activities and their work “outsourced” in some way. Section 149 has been enacted, we consider, to avoid difficulties of that kind, among others.

199               As to the Awards being “paid rates” awards, although a new industrial environment, like that created by the introduction of EN, should and would not necessarily prevent some individual employees receiving more remuneration than that provided by a general prescription, one of the purposes of s 149 is to prevent the occurrence of a hiatus in general prescription of minimum entitlements for employees, so that industrial peace might be preserved: George Hudson Ltd v Australian Timber Workers Union (1923) 32 CLR 413. Section 149 does not contemplate that the new employing entity is not, after transmission, or even in anticipation of it, free to negotiate, or obtain by arbitration, any variation to the relevant award which might be thought necessary for the new circumstances.

200               Further, if those new circumstances do truly make some of the award provisions quite unworkable, then so be it. But that is not determinative of the present question. The ordinary principle is that courts should strive to give effect to a legal instrument if effect can be given to it. In Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSWConvR 55-589, Clarke JA said (Priestley and Handley JJA agreeing):

“There is, in my opinion, a general principle of construction which applies to the present agreement. This principle has been described in a number of ways but is to the effect that courts should be astute, if possible, to adopt a construction which upholds the validity of the contract.”

201               In the context of interpreting a statutory instrument, Cross J said in Clyne v Federal Commissioner of Taxation (1980) 49 FLR 25:

“… it appears to me not unreasonable for a court in construing an instrument affecting the requirements of citizens to furnish returns of income…to seek to give that instrument validity.”

202               This would indicate that the Awards should apply so far as they are capable of doing so, and that a commonsense, adaptive construction of the Awards should be adopted to enable this to occur. The Awards can, simply, apply mutatis mutandis to employees of EN. For example, the ASOs Award prescribed pay rates by broad public service classifications, notably by “classes” of Administrative Service Officer. But the CES and EAA had “local” designations for particular “jobs”, and it would not generally be a matter of difficulty to assign by analogy a post-transmission job to the appropriate class , even if the particular job had changed to some extent in the new environment. A similar process can, if necessary, be undertaken in respect of the “conditions” prescribed, e.g. by GECA.

Can ENA be bound by the Awards if EN is the successor to the business?

203               It was submitted on behalf of EN that the learned primary Judge had erred in failing to give effect to the distinction, as legal entities, between EN and ENA. It was said that EN’s business is that of an employment agency, whereas ENA’s business is that of a “service company”.

204               The “Administration and Services Agreement” between EN and ENA dated 2 October 1997 provided by cl 3 that ENA “will during the Term provide to [EN] the Services necessary to enable [EN] to carry on the Business”. Recital A to the same agreement was that “[EN] proposes to carry on the business of providing Employment Services (“the Business”)”. The following relevant definitions appeared in cl 1.1 of the Agreement:

““Administration Services” means the day to day operation of the Business which includes without limitation, the provision of Consumables, organising necessary insurances, obtaining licences or permits, the keeping of accounts, payment of invoices, the collecting of debts and the provision of office and contract administration;

.....

“Employment Services” means anything permitted to be done by [EN] its Memorandum of Association which includes but is not limited to the services to be provided pursuant to employment services agreements entered into by [EN] with the Commonwealth and includes but is not limited to employment assistance; entry level support services; job search assistance; labour exchange services and any new enterprise incentive scheme;

.....

“Services” means the services necessary to enable [EN] to operate the Business and includes but is not limited to the provision of Additional Services, Administration Services, Employees, Maintenance Services, Plant and Equipment and Premises necessary to operate the Business;”

205               Clause 4 of the same agreement, under the heading “Functions and Duties of [ENA]” obliged ENA to:

“(a) provide the Services to [EN];

(b) provide such human resources and equipment as is necessary to provide the Services to [EN] whenever required by [EN] during the Term and under the Agreement;

(c) act in the best interests of [EN], perform the Services in a proper and efficient manner and use its best endeavours to promote and extend the interests of [EN];

(d) at all times in providing the Services, comply with any reasonable directions given by [EN];

(e) comply with all applicable industrial agreements, laws, standards, statutes, ordinances and codes;

(f) ensure that it and the Employees obey all reasonable instructions and directions issued by [EN];

(g) attend such meetings as may be required by [EN];

(h) report on or explain any aspect of the Services of which [EN] in its absolute discretion may require clarification;

(i) deliver to [EN] all reports which [EN] may in its absolute discretion require in respect of the provision of Services;

(j) promptly deposit the Total Revenue into the Bank Account;

(k) remit the Net Revenue to [EN] as directed by [EN] from time to time;”

206               In the light of that agreement, and when it is remembered that EN has only one employee, its managing director, EN cannot be said, in any realistic sense, to carry on the business of an employment agency or any other business. It is, we consider, true to say that EN has delegated the conduct of, effectively, the whole of its business to ENA. The latter is not comparable with the appellant in PP Consultants, which was said to carry on the business of a banking agent required to perform a limited range of functions while the Bank continued to engage in the full range of activities comprehended by the business of banking. In that respect, it was observed at pars 18 and 19 of the joint judgment in that case:

“Although the appellant has taken over the activities, or at least, a large part of the activities in which the Bank previously engaged in Byron Bay, it has not thereby engaged, for itself, in the business of banking. It does not, in accepting deposits, receive money on loan but instead, it receives, on behalf of the Bank, moneys lent to the Bank. Nor does it, in processing withdrawals, repay money lent to it. Rather, it repays, on behalf of the Bank, money lent to the Bank. And so far as it is involved in processing loans, it is not, itself, lending money, but is handing over money lent by the Bank.

It is correct to say that, in conducting the branch agency, the appellant is involved in banking activities. It is not, however, correct to say that it is carrying on banking business. It is carrying on the business of a bank agent. Moreover, the Bank has not disposed of any part of its business. All that has happened is that the Bank has changed the method by which it carried on its banking business in Byron Bay.”

207               EN, on the facts of the present case, conducts no business for itself except for receiving the net fees payable by the Commonwealth for services rendered by employees of ENA after ENA has recouped the costs of paying ENA’s employees who render the services and of otherwise administering the conduct of EN’s business. It has been contended on behalf of EN that ENA’s business is that of a “service company” and distinct from the business of an employment agency said to be carried on by EN. Precisely what is connoted by the expression “service company” in this context is unclear. A labour hire company may make its employees available to service the needs of its customers in a wide range of different businesses without itself carrying on, or engaging in, any of those businesses. However, ENA does more than merely provide EN with the services of a group of employees who work at the direction of supervisory or executive staff of EN. ENA provides the premises, equipment and the whole of the services necessary to enable EN to operate the business of providing employment services. Accordingly, we regard ENA as more of a delegate than a mere agent of EN and as being no less a participant in the business of its parent company than EN itself.

208               It is also significant that the certificate under s 81C of the Public Service Act discussed at [174] was, we consider, predicated on ENA’s performing “supervisory, clerical and administrative support functions in support of employment services” that were previously performed by persons employed in the Department. That suggests that ENA was seen as performing those functions in its own right and not merely as agent for another entity.

209               Even if the matters which we have just canvassed were regarded as supporting the conclusion that EN is not presently bound by the relevant awards and agreement, that would not deprive the declarations made at first instance of efficacy in respect of ENA. In our view, the substantial identity between the activities formerly carried on by CES/EAA and those now undertaken by employees of ENA, entails that, as contemplated by ss 149(1) and 170MB, the latter has succeeded, otherwise than immediately, to at least part of the “business of government” formerly carried on by CES/EAA. These observations in respect of s 170MB by Mansfield J in Australian Rail Tram & Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683, at [81] - [82] are apposite:

“TT, however, is not the employer of the bus drivers. By the arrangement referred to, TTS is the employer. It is, therefore, necessary to determine whether TTS falls within the scope of operation of s 170MB(2) in the light of my conclusions thus far. TTS puts the contention that it is a labour hire company, whereas TransAdelaide was and is a service provider, and that as a labour hire company TTS does not in the circumstances fall within the shadow of s 170MB(2).

Mere remoteness of any relationship between the former employer and the new employer is not itself a reason to so conclude. Section 170MB(2) clearly contemplates that the new employer may not be the immediate successor transmittee or assignee of the former employer. It would also be surprising if, by the simple device of sub-contracting to a subsidiary company that part of the functions of the former employer as involved the provision of labour, an entity could void what I have found to be the intended operation of s 170MB. If TTS’ contention is correct, it would be equally correct if TT directly contracted with TransAdelaide to acquire from it the right to operate passenger transport services by bus in certain areas. The Court should be slow to permit any such processes to avoid the proper application of s 170MB. Einfeld J in the EN case made similar observations at 219 [70].”

Conclusion

210               It will be apparent from the foregoing reasons that, in substance, each of the appellants’ attacks on the declaration made at first instance, has failed. It appears to be common ground that either or both EN and ENA are bound, if at all, by the Awards and the agreement listed in the Schedule to his Honour’s order only to the extent that each award or agreement is capable, according to its terms, of applying to those corporations in the industrial circumstances in which they operate. That extent will be a matter of construction of particular provisions of the relevant award or agreement and the application of those provisions as so construed to given factual situations.

211               In his separate reasons for judgment, Beaumont J has doubted the utility of making any declarations even if the reasoning which we favour be accepted. His Honour has referred to CEPU v Telstra Corporation Ltd (1998) 85 IR 318 where, after quoting from Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581, in relation to the principles applicable to declaratory relief, Ryan J observed, at 320;

“In the present case, the question is not purely hypothetical because, the applicants contend, some, or perhaps all, of the conditions precedent to the taking of protected industrial action have been satisfied. Nevertheless, some of the relevant circumstances cannot be known with certainty at this stage. In my view, the case is not to be assimilated with Ainsworth, where the matters alleging constituting a denial of natural justice could be identified with complete certainty. Courts have traditionally set their faces against the giving of advisory opinions and the best that the applicants could achieve if their claim for declaratory relief were determined today would be a declaration as to the sufficiency of their notices, the fact that the nominal expiry date of each relevant certified agreement had passed, and perhaps other matters of the same kind.

The declaration, as far as future matters were concerned, would have to be qualified with some such rider as “if the proposed industrial action proceeds to completion without involving personal injury or wilful or reckless damage to property, it will be protected action”. A declaration in that form would be redolent of an advisory opinion.”

212               Although we think it appropriate to qualify, in the way just indicated, the declarations made at first instance, we do not regard that qualification as being of a kind which would render the declarations “redolent of an advisory opinion.” The question at issue here is not purely hypothetical and the parties to the appeals obviously regard its resolution as of some utility because, both at first instance and before this Court, they have argued the applicability of the Awards on an “all or nothing” basis. In this respect, the present case is similar to Australian Rail Tram & Bus Industry Union v Torrens Transport Services Pty Ltd (supra), where the parties were agreed that the only question which Mansfield J was required, in the first place, to answer was;

“Whether TTS is bound by the Mile End Agreement and/or the Port Adelaide Agreement by operation of s 170MBH of the Act.”

213               His Honour answered that question by holding that TTS “is so bound only to the extent that those agreements respectively relate to the part of the business of Trans-Adelaide which has in fact been transmitted to TTS”. Accordingly, the proceedings were adjourned to allow negotiations between the parties about the “matters of detail” which would have to be investigated before effect could be given to the qualified ruling which his Honour had given. In the absence of any suggestion that any investigations of that kind have been undertaken in the present case, we consider it preferable to preserve the declarations made at first instance and attach to them a qualification indicating, in general terms, the extent to which EN and ENA are bound by the listed awards and agreement. Accordingly, to make clear the extent to which EN and ENA are bound by those awards and that agreement, we would allow each appeal in part and vary each declaration made by his Honour by adding the qualification that each award or agreement set out in the schedule to each order bound EN and ENA to the extent that each award or agreement (as the case may be) was capable, on its proper construction, of applying to EN or ENA on and from 1 May 1998. Otherwise each appeal should be dismissed.

Associate:

Dated: 15 June 2001